How an SMSF loan works
An SMSF borrows under a limited recourse borrowing arrangement. The property is held in a separate bare trust until the loan is paid off, and the lender can only claim that property if something goes wrong. That protection for the rest of the fund is why fewer lenders offer SMSF loans and why their rules are tighter.
What lenders usually ask for
- A corporate trustee and a bare trust set up before the contract is signed (or the contract signed the right way)
- Deposit and costs paid from the fund, often 20% to 30% of the price plus stamp duty
- Liquid funds left in the SMSF after settlement, often around 10% of the fund balance
- Rent and super contributions that cover the repayments
- The fund's financial statements and trust deed
Leasing to your own business
Super rules let an SMSF buy business real property and lease it to a related business, as long as the lease is at market rent and on commercial terms. Many business owners use this to own their premises through super. Your accountant or financial adviser must confirm it suits your fund. We arrange the lending, not the advice on whether your fund should buy.
We are credit specialists, not financial advisers. Get advice from a licensed financial adviser or your SMSF accountant before using super to buy property.