SMSF property loans and LRBA lending.
A Limited Recourse Borrowing Arrangement is the only way an SMSF can borrow for property. The structure, the bare trust, and the lender choice all need to line up. Opes has done this 30+ times.
The LRBA in practical terms.
Your SMSF cannot take out a standard mortgage. It can only borrow under a Limited Recourse Borrowing Arrangement (LRBA). The lender's security is limited to the property being purchased. A bare trust holds the legal title until the loan is paid off. The SMSF makes the repayments and the bare trust transfers legal title across when the debt is cleared.
That sentence is short. The execution is not. The fund deed has to allow it, the trustee structure has to be right, the property has to satisfy the single acquirable asset rule, and the lender has to be one of the specialists still active in this market. Most standard mortgage brokers do not do this work. For background on how the property piece sits inside the broader strategy, the SMSF property investment guide walks through the long-form view, and the superannuation advice side covers the contribution settings that feed the file.
What the fund needs before we start.
The feasibility conversation is free. These are the items we look at in the first 30 minutes.
Fund balance
Most specialist lenders look for a starting fund balance in the $200k to $250k range, though it depends on the property price and the LVR. Smaller funds are harder, not impossible.
Trust deed permits borrowing
The SMSF trust deed must explicitly allow LRBAs. Older deeds sometimes need to be updated. Your accountant or a specialist deed provider handles this.
Corporate trustee
Almost always required for SMSF property. Lenders prefer it and the long-term administration is far cleaner than an individual-trustee structure.
Liquidity buffer after settlement
Lenders expect the fund to hold a buffer post-purchase, usually around 10 per cent of the loan amount, to cover repayments if rental income drops.
Single acquirable asset
One property, one LRBA. The property must be on a single title and cannot be substantially altered while the loan is in place. Repairs are fine. Knock-down rebuild is not.
Investment strategy alignment
The fund’s documented investment strategy must support the purchase. Concentration, liquidity, and diversification all need to be addressed before the SoA is written.
The four specialist lenders we write to.
The major banks largely exited SMSF lending years ago. The market is served by specialists. Each has a different appetite on LVR, liquidity tests, and property type. The shortlist is matched to your fund, not pitched as a one-size answer.
- La Trobe Financial
- Residential and commercial SMSF lending. Long-standing in the specialist space.
- Mortgage Ezy
- Competitive LVRs on residential SMSF loans. Useful when liquidity is tight.
- Pepper Money
- Flexible servicing assessment. Helpful when standard policy does not quite fit.
- Granite Home Loans
- SMSF-focused lender. Considered when the file calls for a specialist policy read.
See the full comparison of SMSF lenders for side-by-side LVR caps and policy notes.
ATO compliance is not a footnote.
SMSF property is one of the more closely watched areas of super law. Get the structure wrong and the consequences run from contraventions through to losing complying-fund status.
- Sole purpose test
The fund exists to provide retirement benefits to members. Every decision has to be defensible against that test.
- Arm’s length dealings
Lease terms, valuations, and any related-party arrangements must reflect market terms. Mates’ rates inside super are a contravention.
- In-house asset rule
An SMSF generally cannot lease residential property to a related party. Commercial business real property is the carved-out exception.
- Annual audit
Every SMSF is audited annually by an approved auditor. LRBA structures get extra scrutiny. Documentation matters.
Common questions on SMSF property loans.
An LRBA is the only borrowing structure the ATO allows inside a self-managed super fund. The lender's recourse, if the loan defaults, is restricted to the single asset being purchased. The other assets in the fund are quarantined. A bare trust holds legal title to the asset until the loan is repaid, and the SMSF holds the beneficial interest.
Each LRBA can hold one asset only. A single residential dwelling on one title. A single commercial premises. You cannot use one borrowing arrangement to buy a house and the block next door on a separate title. If you want two assets, you need two LRBAs.
For SMSF property the answer is almost always yes. A corporate trustee for the SMSF makes the borrowing cleaner from the lender's perspective and tidier from a succession point of view. The bare trust also needs its own trustee, separate from the SMSF trustee. Your accountant or solicitor sets up the bare trust structure.
Residential SMSF lending generally tops out at 70 to 80 per cent LVR depending on the lender. Commercial usually sits at 65 to 70 per cent. Most lenders also want a post-purchase liquidity buffer in the fund, often 10 per cent of the loan or a fixed dollar minimum. Lower LVR usually unlocks a sharper rate.
Plan on six to ten weeks. The bare trust set-up, lender conditions, and SMSF compliance reviews all add time compared with a standard home loan. Starting the structure work before contract signing is the single biggest factor in keeping the settlement date safe.
The strategic advice on whether SMSF property is right for the fund. The Statement of Advice. The lender shortlist and the application, with the standard investment property loan side considered where the structure permits, and the specialist SMSF panel where it does not. Coordination with your accountant or solicitor on the bare trust, plus optional buyer's agent support on the property itself. Annual reviews on both the advice and the loan after settlement. One adviser, not three.
Read further
- SMSF hubThe pillar overview of how Opes does SMSF.
- SMSF lenders comparedSide-by-side comparison of the specialist panel.
- SMSF commercial propertyBusiness real property rules and related-party leasing.
- Using super to buy propertyPlain-language guide for first-time SMSF investors.
- SMSF borrowing guideATO rules, pitfalls, and when SMSF property is not the right call.
- Retirement planning hubWhere SMSF property fits in the wider retirement picture.
- SMSF property investment guideLong-form view on strategy, structure, and the trade-offs.
Start with a free feasibility call.
Thirty minutes to read whether your fund is in a position to do this. No paperwork to start.