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SMSF Loans

Commercial property finance for self-managed super funds, and refinancing for the residential SMSF loans already in place.

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Where SMSF lending stands now

SMSF lending after the LRBA ban

Since 10 August 2026 an SMSF can no longer enter a new limited recourse borrowing arrangement to buy residential property. Two things are still possible. An SMSF can refinance a residential LRBA that was already in place before that date, because those arrangements are grandfathered. And an SMSF can still borrow to buy or refinance commercial property that meets the business real property test. LoanBuddy arranges both.

The rule change came in under the Treasury Laws Amendment (Tax Reform No.1) Act 2026 and took effect on 10 August 2026. A 45 day transition ran from 26 June 2026, so contracts signed before the commencement date were able to complete afterwards. From 10 August, no new residential LRBA can be written.

That has not ended SMSF lending. It has narrowed it to two lanes, and both are lanes we work in every week. Shane Heness has been broking for eight years and holds a panel of more than 30 lenders, including the specialist and non-bank lenders that still write SMSF business after the major banks stepped back years ago.

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The 10 August 2026 change

What changed, and what did not

The ban applies to new borrowing for residential property only. Everything an SMSF could do with its own cash, it can still do. Everything already in place before 10 August 2026 continues under the old rules. The table below is the short version.

SMSF property borrowing, before and after 10 August 2026
Scenario	Before 10 Aug 2026	Now
New LRBA to buy residential property	Permitted	Not permitted
Existing residential LRBA	Permitted	Grandfathered, continues under the previous rules
Refinancing an existing residential LRBA	Permitted	Still permitted
New LRBA to buy business real property	Permitted	Still permitted
Refinancing a commercial SMSF loan	Permitted	Still permitted
Buying residential property with fund cash, no borrowing	Permitted	Still permitted

General information only, current at September 2026. Confirm your own position with your accountant or SMSF adviser.

Who this affects most

Trustees who were partway through a residential purchase strategy are the group feeling it hardest. If your fund was accumulating a deposit to buy a rental property through an LRBA, that path is closed. The options now are to buy residential outright with fund cash, to look at commercial property, or to hold the cash in other assets and revisit the strategy with your adviser.

Trustees who already hold a geared residential property inside their fund are largely unaffected day to day. Your arrangement continues. What it does mean is that your existing loan is now sitting in a market with fewer moving parts, and a rate review is worth doing.

Lane one

Refinancing an existing residential SMSF loan

If your SMSF entered its residential LRBA before 10 August 2026, you can refinance it. The arrangement is grandfathered and a refinance does not create new borrowing over new property. In practice that means you can move lenders, renegotiate a rate, or restructure repayments, without losing the grandfathering.

Most of the SMSF loans we see were written between 2018 and 2024, often at a rate that made sense at the time and has not been looked at since. Because the SMSF lender pool is small, the spread between the sharpest and the dullest rate in the market is wider than it is in ordinary residential lending. That spread is the whole argument for reviewing.

Reasons trustees refinance

A fixed rate expiring. Reverting rates on SMSF loans are rarely competitive. The month your fixed term ends is the single best time to review.
A legacy rate that has drifted. Lenders reprice their back books. A loan settled three or four years ago is often no longer on the rate that lender would offer today.
The current lender has left the market. Several SMSF lenders stopped writing new business but kept servicing existing loans. Those books tend to get expensive.
Repayment structure. Moving between principal and interest and interest only, or resetting a loan term, changes the fund's cash flow position against its contribution and rental income.
Consolidating after a change in the fund. A member leaving, a rollover in, or a change of trustee often prompts a broader review.

What a refinance does not let you do

A refinance replaces the existing loan on the existing asset. It cannot be used to release equity to buy another residential property inside the fund, because that would be new borrowing for a residential acquisition. It also cannot fund improvements to the property. Borrowed money under an LRBA has never been able to pay for improvements, only repairs and maintenance, and that has not changed.

What we need to start

Your current loan statements, the fund trust deed, the holding trust deed, the last two years of fund financials and tax returns, member statements and a current rental appraisal. If the fund has a corporate trustee, the company documents as well. Most trustees can pull this from their accountant in a day.

Lane two

Commercial property purchases and refinances

An SMSF can still borrow to buy commercial property, provided the property meets the business real property test: land and buildings used wholly and exclusively in one or more businesses. Warehouses, factory units, medical suites, offices and shopfronts usually qualify. This is the lane most affected trustees are now looking at.

Business real property carries an advantage nothing else in super has. It is exempt from the in-house asset rules, which means your SMSF can own the premises your own business trades from, and lease them back to that business. The lease has to be at genuine market rent on commercial terms, documented properly, and the rent has to actually be paid. Get that right and the fund collects the rent your business was previously paying to a landlord.

The business real property test in practice

Zoning does not decide the question, use does. A few worked examples of how it tends to fall:

Business real property, common cases
Property	Usually qualifies?	Why
Industrial warehouse leased to an unrelated trading business	Yes	Wholly and exclusively used in a business
Your own trade business premises, leased back from the fund	Yes	Business real property is exempt from the in-house asset rules
Medical or dental suite	Yes	Used wholly in the practice's business
Shop with a residential flat above on one title	Often no	Material residential component breaks the wholly and exclusively test
Vacant commercial land	Depends	Turns on current and intended use, and lenders are cautious
Serviced apartment or short stay accommodation	Usually no	Generally treated as residential for lending purposes

Indicative only. The test is applied to the specific property and its actual use. Your accountant or SMSF adviser should confirm before you sign a contract.

What commercial SMSF lending looks like

The parameters below are the ranges we see across the panel. They move, and no two lenders read a file the same way, so treat them as the shape of the market rather than a quote.

Typical commercial SMSF lending parameters, September 2026
Parameter	Typical range	What moves it
Maximum LVR	65% to 75%	Property type, location, lease strength, whether the tenant is related
Minimum fund balance	Commonly $200k+ after settlement	Lender policy, not law. Some have no stated minimum
Liquidity buffer required	6 to 12 months of repayments	Lender appetite and the fund's contribution history
Loan term	15 to 30 years	Property type and lender. Commercial terms are often shorter
Repayment type	Principal and interest, some interest only	Lender policy and the fund's cash flow position
Trustee structure	Corporate trustee usually required	A handful of lenders accept individual trustees
Valuation	Full valuation, always	Commercial valuations take longer and cost more than residential

Indicative ranges across the LoanBuddy lender panel at September 2026. Not an offer of credit. Actual terms are confirmed in writing by the lender.

Who we help

Situations we deal with most

Business owner buying their own premises

A trade, medical or professional business paying rent to a landlord, where the owners want the fund to hold the building instead. We map the deposit, the buffer the lender will want left in the fund, and the lease terms that keep it compliant.

Trustee rolling off a fixed SMSF rate

The fixed term ends and the reversion rate is well above market. We compare the current loan against the lenders still writing SMSF business and move it if the numbers justify the switch.

Fund stuck with a lender that exited

Several SMSF lenders closed to new business but kept servicing existing loans, and those books tend to drift. If your lender no longer writes SMSF loans, a review is overdue.

Trustees whose residential plan was cut short

The fund was building a deposit for a geared residential purchase and the ban closed that path. We talk through the commercial alternative and what the fund would need to make it work.

Accountants and advisers with SMSF clients

We work alongside accountants and licensed advisers on the finance side, and stay out of the strategy side. Happy to join the client call rather than run a parallel conversation.

Funds restructuring after a member change

A member exiting, a rollover in, or a trustee change often prompts a full review of the fund's borrowing. We look at the loan alongside whatever the new structure needs.

The process

How an SMSF loan runs, step by step

Realistic durations from the files we settle. A commercial purchase runs six to ten weeks end to end. A residential SMSF refinance runs four to six weeks.

1Day 1, 45 minutes
Discovery call
We go through the fund, the members, the balance, the contribution pattern and what you are trying to do. If the strategy needs an adviser's sign-off first, we will say so before anyone spends money.
2Days 2 to 7
Document gathering and structure check
Trust deed, holding trust deed, corporate trustee documents, two years of fund financials and tax returns, member statements. We read the deed for the borrowing power clause before anything goes to a lender, because a deed that does not permit borrowing is the most common reason a good deal stops.
3Days 5 to 10
Lender selection and pre-assessment
We take the file to the lenders currently writing SMSF business and get a read before formal submission. For a related party lease, this is where the rent and lease terms get tested.
4Days 10 to 14
Application submitted
Full submission with a written credit summary explaining the fund, the asset and the servicing position. SMSF files are assessed by specialist credit teams and a well-presented file moves materially faster.
5Weeks 3 to 5
Valuation and legal review
Commercial valuations take one to three weeks depending on the asset and the location. In parallel the lender's legal team reviews the trust deeds. Expect questions. We answer them rather than passing them to you.
6Weeks 5 to 7
Formal approval and loan documents
Unconditional approval issues, then loan documents. Documents for an SMSF loan are signed by the fund trustee and the holding trust trustee, and many lenders require independent legal advice certificates before they will proceed.
7Weeks 6 to 10
Settlement
Funds disburse, the holding trust takes title, and the fund starts making repayments. We check the first repayment comes out correctly and the rate matches what was approved.
8Every 12 months
Annual review
We diarise the settlement anniversary and review the rate against the market each year. On a small lender panel with wide spreads, that review is where most of the long-run saving comes from.

Getting it right

What SMSF lenders actually check

SMSF credit teams look at the fund as well as the property. The list below is what turns up on almost every file.

Does the trust deed permit borrowing? Older deeds sometimes do not. A deed update is straightforward but has to happen before submission, not after.
Is there a separate holding trust with its own trustee? The asset cannot be held directly by the fund under an LRBA.
Does the fund have a corporate trustee? Most lenders require one for both the fund and the holding trust.
Can the fund service the loan? Lenders count rent plus concessional contributions, usually with a buffer applied to both.
What is left in the fund after settlement? Six to twelve months of repayments is the common expectation.
Is the contribution history consistent? Irregular or recently started contributions get discounted in servicing.
Is the lease arm's length? For a related party lease, market rent evidence and a proper written lease are not optional.
Is it one acquirable asset? Two titles means two arrangements, two loans and two sets of costs.

Costs to budget for

Beyond the deposit and stamp duty, an SMSF purchase carries setup costs a standard purchase does not: holding trust establishment, a corporate trustee company if the fund does not have one, the lender's legal and valuation fees, and independent legal advice certificates where required. Your accountant will also charge more at the next fund audit. We set these out in writing before you commit so there are no surprises at settlement.

Written by Shane Heness

Owner and mortgage broker at LoanBuddy, Parramatta NSW. Eight years as a mortgage broker and a property investor since 2015. Credit Representative #528658 under Australian Credit Licence #389328.

FAQ

Common questions about SMSF loans

No. From 10 August 2026, an SMSF cannot enter a new limited recourse borrowing arrangement to acquire residential property. The change came in under the Treasury Laws Amendment (Tax Reform No.1) Act 2026. An SMSF can still buy residential property outright with its own cash, and it can still borrow to acquire commercial property that meets the business real property test.

Yes. Residential LRBAs that were in place before 10 August 2026 are grandfathered and can generally be refinanced. Refinancing does not create a new borrowing arrangement over new property, so it sits outside the ban. This is the most common SMSF job we handle now, usually for trustees rolling off a fixed rate or sitting on an uncompetitive legacy SMSF rate.

An LRBA is the only borrowing structure superannuation law permits for a geared property purchase inside an SMSF. The asset is held in a separate holding trust (also called a bare trust) until the loan is repaid, and the lender's recourse in a default is limited to that single asset. Other fund assets cannot be pursued.

Business real property is land and buildings used wholly and exclusively in one or more businesses. A warehouse, a medical suite, a factory unit, a shopfront or an office floor will usually qualify. Zoning alone does not decide it, actual use does. A residential flat above a shop, or a property with a material residential component, can fail the test.

Yes, and this is the most common commercial SMSF strategy. Business real property is exempt from the in-house asset rules, so your SMSF can own the premises and lease them back to your own business. The lease must be on genuine commercial terms at market rent, documented, and rent must actually be paid on time.

Most SMSF commercial lenders work to a maximum of 65% to 75% of the property value, so the fund needs 25% to 35% of the price plus stamp duty and costs. Lenders also want a liquidity buffer left in the fund after settlement, commonly six to twelve months of loan repayments. We confirm the exact figures with the lender before you commit to a contract.

Yes. SMSF lending is a specialist product with a smaller lender pool, extra trust structures and more complex security, so rates sit above standard residential pricing. The gap is one of the reasons a refinance review is worth doing on any SMSF loan more than a couple of years old.

The major banks largely exited SMSF residential lending years ago. The active market is specialist and non-bank lenders plus a handful of smaller banks, and each has its own view on fund balance, trust deed wording, contribution history and property type. We hold a panel of more than 30 lenders and know which are currently writing SMSF business.

Borrowed money under an LRBA cannot be used to improve an asset. Repairs and maintenance that restore the asset to its original function are allowed, but an improvement that changes the character of the asset is not. A kitchen replaced like for like is generally a repair. A second storey added is an improvement. Fund cash can pay for improvements even where borrowed money cannot.

Each LRBA can hold only one asset, or a collection of identical assets with the same market value. In practice that usually means one title. Two adjoining lots on separate titles need two separate arrangements, which means two loans, two holding trusts and two sets of costs.

Most SMSF lenders require a corporate trustee for both the fund and the holding trust. Some will accept individual trustees, but the pool is much smaller and the paperwork is heavier. If you are setting up for a purchase, getting the structure right at the start avoids a restructure later.

Allow six to ten weeks for a commercial SMSF purchase and four to six weeks for a residential SMSF refinance. Commercial valuations take longer than residential ones, and the lender's legal team reviews the trust deed and holding trust documents before formal approval. Starting the document gathering early is the single biggest thing that shortens it.

The SMSF trust deed, the holding trust deed, the corporate trustee company documents, the last two years of fund financial statements and tax returns, member statements, a rental appraisal or lease, the contract of sale, and evidence of contributions or rollovers. For a business premises purchase, the lender will also look at the business behind the lease.

Yes. We arrange the finance, not the superannuation strategy. Whether an SMSF should hold property at all, and whether the fund can carry the loan through to retirement, is a question for your accountant and a licensed financial adviser. We work alongside both and are happy to be on the call.

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