Fact Checked
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | LVR | Lump Sum Repayment | Additional Repayments | Split Loan Option | Tags | Features | Link | Compare |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
6.99%p.a. | 7.00%p.a. | $2,659 | Principal & Interest | Variable | $0 | $230 | 70% | Featured Includes NOV RBA Rate Increase |
| |||||||||
7.19%p.a. | 7.74%p.a. | $2,712 | Principal & Interest | Variable | $395 | $1,185 | 60% |
| ||||||||||
7.09%p.a. | 7.20%p.a. | $2,685 | Principal & Interest | Variable | $0 | $1,170 | 70% | |||||||||||
7.39%p.a. | 7.47%p.a. | $2,767 | Principal & Interest | Variable | $0 | $995 | 80% | |||||||||||
7.24%p.a. | 7.25%p.a. | $2,726 | Principal & Interest | Variable | $0 | $0 | 70% | |||||||||||
7.25%p.a. | 7.65%p.a. | $2,729 | Principal & Interest | Variable | $30 | $1,190 | 80% | |||||||||||
7.40%p.a. | 7.79%p.a. | $2,770 | Principal & Interest | Variable | $395 | $1,920 | 80% | |||||||||||
7.49%p.a. | 8.04%p.a. | $2,794 | Principal & Interest | Variable | $395 | $1,185 | 80% |
| ||||||||||
8.19%p.a. | 9.11%p.a. | $2,988 | Principal & Interest | Variable | $395 | $1,185 | 90% |
| ||||||||||
7.49%p.a. | 7.50%p.a. | $2,794 | Principal & Interest | Variable | $0 | $230 | 80% | Featured Includes NOV RBA Rate Increase |
|
Important Information and Comparison Rate Warning
Hot December SMSF Loan Rates and Deals
More than 1.1 million Australians have a self-managed super fund (SMSF), with around 610,000 SMSFs currently in existence according to the latest data from the ATO. Around 10% of these funds have an SMSF loan via a limited recourse borrowing arrangement (LRBA), holding around $55 billion worth of assets - primarily residential and commercial property.
While the big four banks no longer offer SMSF loans, several other lenders do. Here are some of the top deals for SMSF loans on the market at the moment:
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loans.com.au’s SMSF 70: 6.74% p.a. (6.75% p.a. comparison rate*)
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WLTH’s Ocean SMSF 60 P&I: 6.94% p.a. (7.46% p.a. comparison rate*)
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Reduce Home Loans' Capitalizer SMSF 70 Metro: 6.94% p.a. (7.05% p.a. comparison rate*)
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Liberty’s Liberty Residential SMSF (LVR<80%): 7.00% p.a. (7.41% p.a. comparison rate*)
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La Trobe Financial’s SMSF Residential: 7.09% p.a. (7.16% p.a. comparison rate*)
Rates and product info correct as at 6 November 2023
What is an SMSF loan?
A self-managed super fund (SMSF) loan finances investments to be made through self-managed super. SMSFs are designed to give members more control over their super, and SMSF loans provide leverage to buy larger-value assets.
SMSF loans are primarily designed for the purchase of commercial and residential property - one of the most popular asset classes held in SMSFs.
Which banks lend to SMSF?
SMSF loans are primarily designed for the purchase of commercial and residential property - one of the most popular asset classes held in SMSFs. As well as banks, there are non-bank lenders that provide lending for Self Managed Super Funds (SMSF). Some major banks no longer offer SMSF lending. Below are some of the lenders that do lend to SMSF’s:
- loans.com.au
- Firstmac
- Yard
- La Trobe
- Liberty
Look for local expertise and systems managed in Australia.
Self-managed Super Fund home loans can have some complicated elements to them. There are strict legal obligations for running your SMSF and penalties can apply if you don’t meet these requirements - so it's important you choose a lender you can trust.
We’d suggest you look for a team that is local and experienced to manage your SMSF. Our support team can assist with a simple, low-fee SMSF loan with both variable and fixed-rate options. Whether you’re looking to refinance to a lower rate or purchase a new residential investment property within an SMSF, we’re here to help.
How does an SMSF loan work?
SMSF loans are (by default) what's called a limited-recourse borrowing arrangement or LRBA.
What this means is that in the event of default, a lender cannot come for other assets within the SMSF - only the asset in which the loan is secured against. As a result of this, SMSF loans generally attract higher interest rates than regular home loans.
SMSF loan interest rates
When an SMSF is borrowing from a related party, such one of the members themselves, the ATO specifies what the interest rate on the SMSF loan must be. As at the 2022/2023 financial year the ATO sets these rates at 5.35% p.a. for loans used to purchase real property and 7.35% p.a. for listed shares - more background on this can be found on the ATO website. These have been bumped-up by 0.25% or 25 basis points from the previous financial year.
This 5.35% p.a. rate is what the ATO generally considers to be on par with what an unrelated party - such as a commercial lender - would charge on an SMSF home loan. However, many lenders offer SMSF home loan rates much lower than this.
Since SMSF home loans are LRBAs, which are inherently more risky for the lender than standard 'full recourse' loans, it is not uncommon for SMSF home loans to attract interest rates a full percentage point (1.00% or 100 basis points) higher than standard investment home loans.
SMSF minimum balance
There is no minimum legal balance an SMSF is legally required to have. However, given the relatively high costs of setting up and operating an SMSF, it’s generally recommended you have a considerably high balance for the SMSF to be worth it.
According to the Australian Tax Office, 2018-2019 data shows the average SMSF had assets of more than $1.3 million.
What sort of fees does an SMSF loan have?
Like regular home loans, SMSF loans usually have a set of fees that are lender-specific. Common fees include an establishment fee, monthly or annual fees, settlement fees and more.
Read more: SMSF fees
How to compare SMSF lenders
Like with a home loan, there are a few key things you need to compare with SMSF loans:
Interest rates
Interest rates are typically higher on SMSF loans than regular home loans, making them generally more expensive to service.
Fees
Common fees include establishment/settlement fees, monthly or annual fees, and so on. This is often reflected in the comparison rate.
Loan-to-value ratio
Many SMSF loans typically restrict the borrower to 80% LVR, i.e. a minimum 20% deposit, however some lenders may allow higher ratios.
One other major consideration is if your SMSF loan allows for residential or commercial property. Typically one loan might only allow for one type of property, however some loans facilitate both.
SMSF loan pros
Borrowing through your SMSF can have a number of advantages, including:
The loan
The most obvious benefit of SMSF borrowing is you’re able to use money you might not have already had to purchase a property. Using an LRBA may allow an SMSF to diversify into property and increase the profits of the fund, further setting up members for retirement.
Repairs
In addition to buying a home, borrowed funds can be used to repair existing fixtures in a home owned by the SMSF. However, there are potential ATO-led penalties for making 'improvements' rather than 'repairs'.
SMSF loan cons
There is a lot to consider with SMSF loans, including some of these drawbacks:
Cash flow
Borrowing money to purchase a home means your SMSF will have less liquidity and cash flow. You may have to use cash from the fund to cover loan repayments, which could become harder if interest rates rise.
Higher costs
SMSF loans typically have higher fees and interest rates than regular home loans.
Difficult withdrawal
Should you, for whatever reason, no longer to wish to borrow money, it’s very difficult to rollback the loan and the lender may hold you to the contract.
Frequently Asked Questions
SMSFs are bound by the same contribution caps that apply to conventional super funds. Concessional (before tax) contributions are capped at $25,000 per year, while non-concessional (after-tax) contributions are generally capped at $100,000 per year. As the table below outlines, the non-concessional cap can be brought forward by up to $300,000, depending on your super balance:
| Total superannuation balance | Non-concessional contribution cap and bring forward period |
|---|---|
| Less than $1.4 million | Access to $300,000 cap (3 years) |
| Greater than or equal to $1.4 million and less than $1.5 million | Access to $200,000 cap (2 years) |
| Greater than or equal to $1.5 million and less than $1.6 million | Access to $100,000 cap (no bring-forward period, general non-concessional contributions cap applies) |
| Greater than or equal to $1.6 million | Nil |
Source: ATO
Unless you are a qualified professional who uses their qualifications for the services provided, you cannot reimburse yourself. For example, if you are an accountant by trade, and prepare the SMSF’s tax return for which you are a trustee, you can pay yourself for this.
An accountant can greatly assist in the creation of an SMSF. They can help in the application of your ABN to the ATO, and provide advice when creating the trust deed. They can’t solely set up the SMSF though, as trustees will need to decide on things like the structure, trust deed, investment and exit strategy.
There is no law which prevents you from having an SMSF and an industry fund. Managing your own super means you can make contributions into either, and when you create the SMSF, you’re not required to roll over all the funds from your original fund into the SMSF.
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