SMSF property lending, done correctly.
SMSF lending is a specialist niche. Limited recourse borrowing, bare trust structures, liquidity rules, and a shrinking lender panel mean the broker's job is as much about knowing the rules as finding a rate.
LRBA, bare trusts, and the rules that don't bend.
An SMSF loan is structured as a Limited Recourse Borrowing Arrangement (LRBA). The SMSF doesn't hold the property directly during the loan term — a separate bare trust (sometimes called a custodian trust or holding trust) holds legal title, and the SMSF holds the beneficial interest. If the loan defaults, the lender's recourse is limited to the specific asset inside the bare trust, not the rest of the SMSF's assets. That's the 'limited recourse' in LRBA.
Beyond that, the single acquirable asset rule, the in-specie contribution limits, related party transaction restrictions, and liquidity tests all apply. Lenders will test whether the SMSF has enough liquidity to service the loan under stress, often requiring 10% of the loan balance held in cash or liquid assets. Get any of this wrong and the ATO has real teeth.
Two paths.
SMSF lending FAQs
Why is the SMSF lender panel so small?
What LVR can the SMSF borrow to?
Can the SMSF borrow to buy a property I already own?
Related pages
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