Lender

Variable
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SELF MANAGED SUPER FUND LOAN
  • Easy refinance process
  • No application fee and no settlement fee
  • No monthly, annual or ongoing fees
SELF MANAGED SUPER FUND LOAN

SMSF 80

  • Easy refinance process
  • No application fee and no settlement fee
  • No monthly, annual or ongoing fees
Variable
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  • Easy refinance process
  • No application fee and no settlement fee
  • No monthly, annual or ongoing fees

Ocean SMSF (No Offset) (Metro) (Principal and Interest) (LVR < 60%)

  • Easy refinance process
  • No application fee and no settlement fee
  • No monthly, annual or ongoing fees
Variable
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  • Easy refinance process
  • No application fee and no settlement fee
  • No monthly, annual or ongoing fees

SMSF 70 (Refinance)

  • Easy refinance process
  • No application fee and no settlement fee
  • No monthly, annual or ongoing fees
Variable
More details
  • Easy refinance process
  • No application fee and no settlement fee
  • No monthly, annual or ongoing fees

SMSF Loan (Interest Only) (LVR < 60%)

  • Easy refinance process
  • No application fee and no settlement fee
  • No monthly, annual or ongoing fees
Variable
More details
  • Easy refinance process
  • No application fee and no settlement fee
  • No monthly, annual or ongoing fees

Liberty SuperCredit SMSF (LVR < 60%)

  • Easy refinance process
  • No application fee and no settlement fee
  • No monthly, annual or ongoing fees
Variable
More details
  • Easy refinance process
  • No application fee and no settlement fee
  • No monthly, annual or ongoing fees

SMSF Residential

  • Easy refinance process
  • No application fee and no settlement fee
  • No monthly, annual or ongoing fees
Variable
More details
  • Easy refinance process
  • No application fee and no settlement fee
  • No monthly, annual or ongoing fees

SMSF 70 (Purchase) (New Customer)

  • Easy refinance process
  • No application fee and no settlement fee
  • No monthly, annual or ongoing fees

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of May 26, 2022. View disclaimer.

Investing in commercial property through SMSFs has traditionally been more popular than residential property - though it is starting to even-out. Many SMSF lenders typically lend for commercial property, while decidedly fewer also lend for residential. So, why would you want to invest in commercial property, and how do commercial property loans for SMSFs work?

SMSF Commercial Property Loans Explained

Ever wanted to be Tony Stark and own your own highrise? Using your self-managed super fund is one of the most accessible ways of investing in commercial property. And the good news is, there’s a loan for that, and loans typically come with much higher loan limits than with other types of property loans. It’s also popular for small and medium enterprise (SME) owners to invest in commercial property through their SMSF and lease it back to themselves by paying rent into the SMSF. Here’s what else you should know about SMSF commercial property loans.

Loan restrictions

While not all are created equal, some lenders have certain restrictions on the type of commercial property in which you can invest. Some lenders forbid renovations, while many others also limit loans to ‘standard-use’ commercial properties. This includes offices, shops and warehouses, and may exclude development sites or vacant land.

Interest rates

An SMSF loan is what’s called a limited recourse borrowing arrangement, or LRBA. What this means is that in the event of default, the lender can only come after the asset used as security for the loan, rather than other investments in the SMSF.

As a consequence, interest rates with SMSF commercial property loans are often higher than what you would find on a regular commercial property loan. It is not uncommon for an SMSF loan to be a full percentage point higher - or more.

Fees

Oh, the fees. This is lender-specific, but don’t be surprised to find fees attached to your loan such as: application fee, SMSF review fee, valuation fee, establishment fee, settlement fee, ongoing fee, discharge fee, and other fees. Depending on your lender, by the time you secure the bag, you’re a couple of grand out of pocket.

LVRs for SMSF Commercial Property Loans

Commercial property loans through SMSFs are typically limited to a 70% loan-to-value ratio (LVR). What this means is that a borrower must have a minimum 30% deposit. While there are always exceptions to the rule, this is higher than residential property SMSF loans which typically require 80% LVR i.e. only a 20% deposit.

Satisfying the Australian Tax Office

Before investing in commercial property, you’ll need to make sure it’s actually ‘business real property’ to satisfy the ATO and its requirements for SMSFs. Under the business use test, the property must be used wholly and exclusively in one or more businesses. Farms with residential dwellings are still allowed, provided the dwelling is on land no more than two hectares and the main use of the property is not for domestic or private purposes.

Other than that, the usual ‘sole purpose test’ and ‘at arm’s length' requirements still apply, such as having the fund only to benefit members and trustees, and not leasing a property at a discounted rate or to family members.

SMSF commercial property loan pros

  • Leverage: One of the most important benefits is that you can use money you don’t have on what’s hopefully a high-performing asset, and the return on investment outweighs the interest you pay on your loan.
  • Access to high rental yield: Commercial properties, particularly high-street shops, often command extremely high rents. This can then be fed straight back into your SMSF, so you benefit not only from capital gains, but high rental yields too.
  • Tax benefits: Superannuation carries with it special tax treatment in Australia, and having commercial property in your SMSF could be more beneficial than investing outside of your super - you just can’t access your super until retirement.
  • Higher loan limits: SMSF residential property loans are often restricted to $1 million, while for commercial properties it could be $4 million or higher.

SMSF commercial property loan cons

  • Higher interest rates: SMSF commercial property loans typically attract much higher interest rates than with regular home loans, which can add hundreds or thousands to your loan repayment every month.
  • Market volatility: Commercial property is typically a much more volatile asset class than residential property. Certain events - like a pandemic - could trigger high vacancy rates and plummeting asset prices.

Frequently asked Questions

Yes, provided you satisfy the ATO’s ‘sole purpose’ and ‘at arm’s length' requirements. What this generally means is that you can’t lease to a family member, and you can’t offer the property at a discounted rental price - it must be fair market value. It is also popular for small businesses to lease their own property through their SMSF and pay rent into the fund.

The short answer is yes. If you are looking to finance your investment, you’ll need to make sure your lender allows for SMSF commercial property investment - not all lenders cater towards this type of borrowing.