These home loans offer low costs, coupled with a host of features, giving the best overall value.
7+
Great
These home loans may have slightly higher interest rates or fewer features but overall, a competitive offering.
5+
Standard
Usually the home loans would offer above average rates. They may still include some competitive features.
0+
Basic
Higher costs and/or fewer features.
What is an SMSF home loan?
An SMSF home loan is for borrowers with a self-managed super fund (SMSF) who want to use the funds to purchase an investment property. You cannot live in the home you buy until you're in the pension phase.
Rental income and capital growth generated by the investment property go back into your super fund's retirement savings.
You need a specific SMSF home loan to borrow money through your super fund. However, it's getting increasingly harder to find lenders that offer these products. This page has some SMSF loans you can apply for, and more information about how these financial products work.
How SMSF trustees invest in property
SMSF investment in residential properties reached $57.5million in September 2024.
Investment in commercial properties reached $107.6million.
Investment in overseas residential property reached $471m.
Investment in overseas commercial property reached $213m.
* Figures from latest ATO quarterly SMSF statistical report, for the quarter up to September 2024.
What are the features of an SMSF home loan?
The list below describes some of the most critical features of an SMSF home loan and SMSFs themselves:
Rates and fees. SMSF loans have higher rates than most other home loans. Some lenders charge application or ongoing fees with these loans.
Higher deposit. You may need to provide a higher deposit than is required for a standard home loan. Lenders will generally expect 20-30% of the property price.
Managing your own investments. The goal of an SMSF fund is to provide members with funds for their retirement. This means that any investing must directly benefit the fund members. You must keep any personal business and financial concerns separate from the fund.
Additional contributions from the trustees. Additional contributions can be made. However, there are some limits that depend on the age of the person in question, as well as their contribution limits. You can be charged penalties for contributions which exceed the limit, and these limits vary every year.
Managing the fund. As a super fund trustee, you'll need to keep excellent records of the projects the fund undertakes. You must also comply with the rules and regulations regarding lodging your annual return.
Accessing your funds. Fund members will be able to access SMSF funds once the release conditions are met. This can be at the time of retirement, otherwise known as "preservation age". Your preservation age differs depending on when you were born:
You won't be able to access these funds before the appropriate age unless you experience extreme financial hardship, are suffering from a terminal medical condition, or are permanently or temporarily disabled.
How do I purchase a property through my SMSF?
The process of purchasing a property through an SMSF is similar to a regular property. However there are a few key exceptions and each lender will have its own restrictions.
The main difference is that an SMSF mortgage is more difficult to process, with fines of over $200,000 applying to trustees if their arrangements aren't properly structured.
It's a good idea to seek advice from an experienced mortgage broker or find out about any SMSF training your lender may be offering.
Steps for purchasing property with an SMSF loan
If you don't have an SMSF yet, set one up with the help of your accountant. They can also advise of the benefits of investing in residential property via your fund.
Find the property you wish to purchase as an investment.
Decide who will act as a custodian for the property. The custodian holds the property title on your behalf until the loan is paid off (otherwise known as a "bare trustee").
Submit the home loan application along with all the required documentation.
The custodian issues payment of the deposit. Contracts for the purchase of the property are exchanged.
If the loan is approved by the bank, the custodian puts the property up as security with the lender so the transaction can be finalised.
You cover the costs of stamp duty and legal expenses.
Once the loan is settled you begin making repayments and cover other day-to-day expenses on the property.
Once the loan has been paid off, the title can be transferred to the SMSF from the custodian or the property can be sold off.
What is a custodian?
An SMSF or its trustees are not allowed to hold the title of a property. This means that when you purchase a property through your SMSF a custodian needs to be listed on the property title instead. The custodian will hold the title until the loan has been fully repaid. It will then transfer to the fund.
The SMSF members still benefit from any income from the property, but having a custodian on the property title keeps them in line with superannuation rules.
What are the restrictions on an SMSF property?
There are some restrictions when it comes to any property bought by an SMSF.
You can't construct a new home through your SMSF.
You can't live in the home at any stage until you begin receiving your pension.
You can't rent out the property to any family members either.
If you or someone close to you already owns property, you can't purchase that for your SMSF.
Major renovations are not allowed, but you can carry out minor repairs and maintenance.
If you are buying commercial property through your SMSF though, some of these restrictions do not apply. For example, you would be able to use the property for your own business. You can also purchase a commercial property that you or someone close to you already owns.
It is important to speak to a mortgage broker or other finance professional about the restrictions on an SMSF home loan.
Which banks have loans for SMSF trusts?
Most lenders have pulled out of the SMSF home loan market due to the potential risks associated with these products for lenders. AMP, Macquarie Bank, St.George and the Big Four banks all previously offered these types of loans, and have all exited the SMSF loan market.
The lenders that still offer these products include:
How your SMSF property works with capital gains tax
Capital gains tax (CGT) is paid when you sell an investment property at a profit (the same goes for shares or other investment assets).
Capital gains tax is charged at 15% if you sell your SMSF property while you're still accumulating your super. If you hold onto it for a year it will attract capital gains at the reduced rate of 10%.
If you sell the property when you're receiving your pension though, you'll be exempt from paying capital gains tax.
If you're thinking of buying an investment property with an SMSF, but you haven't set up the fund yet, make sure to read our complete guide.
Frequently asked questions about SMSF home loans
The biggest obstacle SMSF borrowers face is that they have to prove the fund earns enough to be able to easily service the loan. Most lenders will analyse the trust's income by looking at its tax returns for the previous 2 years and will then determine if the earnings of the trust along with the estimated rental income will be enough to cover the repayments and pay off the loan.
Stamp duty is paid when a property is transferred from the seller to the buyer, which means that the SMSF will have to pay stamp duty on the initial transfer. However, when the property is purchased, it is held under the ownership of a custodian whose structure can differ from bank to bank. The problem is that once the loan is paid off in full and the property needs to be transferred to the SMSF, with some structures, you will have to pay stamp duty again.
Some lenders want SMSF borrowers to register the property under the name of their custodian, which holds the property title on trust for the SMSF. In other words, when the loan has been paid off, the SMSF might have to pay stamp duty again for the legal title of the property to be transferred to the SMSF trustee from the custodian, which could mean thousands of dollars in tax. This can sometimes be avoided by ensuring you consult the right tax law professional, as the timing of your transfer, contract of sale and deeds can influence this.
If the SMSF is new, some banks will look further than the trust's earnings and analyse how much the beneficiaries are earning, as well as what superannuation contributions they have made on a regular basis and how much they intend to contribute in the future. If the contributions do not exceed the capped limit set by the ATO, the loan might be evaluated based on the level of these contributions. The beneficiaries also have to show that they can contribute without suffering any financial strain.
Remember that lenders are fully aware of how much you can deposit as concessional and non-concessional contributions, but the limit can change from one year to the next. If the only way to prove that the SMSF can repay the loan is by making contributions over the imposed limits, the loan will not be approved.
This depends on the lender but if you are close to retiring, there is a chance that the lender will not take your superannuation contributions into account when evaluating the loan applications. After all, if you are no longer earning a wage or salary or making any other type of income, you will no longer be contributing to the fund.
If this is the case, the amount of the loan might be reduced so that the money being made from renting out the property will be able to cover the repayments. The lender might also opt to shorten the term of the loan.
By law, you're generally only permitted to purchase an asset with your SMSF using a "limited recourse borrowing arrangement" (LRBA). This means if you default on your loan, your lender cannot seize any of your other SMSF assets – only the asset that is the object of the loan. Any other assets your SMSF owns are protected. This type of loan comes with drawbacks – namely less flexibility than a regular home loan and limits to how you can deal with the purchased property which are explained below.
Some banks might require the members of the fund to provide guarantees, but these will be structured in such a way that the guarantors can take no action against the trustee of the fund if the SMSF defaults on the loan. However, there are lenders that will not ask for a personal guarantee from the fund's members.
Some lenders are more lenient than others, so the answer to this question can change. Despite this, a lot of lenders will not take into consideration earnings derived from shares or interest being generated by the assets the trust currently owns. If these assets are being sold so that the SMSF can put down a deposit to buy the property, the income cannot be taken into account when the loan is being evaluated because it will cease to exist.
There are certain restrictions when it comes to selling property you own to your SMSF. So, while your fund cannot purchase residential property from you or someone related to you, you can sell a commercial property that you own to your SMSF.
It is imperative that you are very careful because you could be heavily penalised if you make a mistake, including having to pay a significant penalty tax which could represent a hefty percentage of your super fund's balance. So, it's best that you get advice from an accountant who specialises in SMSFs when you want to sell a property you or someone close to you owns to the fund.
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Richard Whitten is Finder’s Money Editor, with over seven years of experience in home loans, property and personal finance. His insights appear in top media outlets like Yahoo Finance, Money Magazine, and the Herald Sun, and he frequently offers expert commentary on television and radio, helping Australians navigate mortgages and property ownership. Richard holds multiple industry certifications, including a Certificate IV in Mortgage Broking (RG 206) and Tier 1 and Tier 2 certifications (RG 146), as well as a Graduate Certificate in Communications from Deakin University. See full bio
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Richard has written 623 Finder guides across topics including:
Also, I read on this page that if I go into pension phase and sell my SMSF residential home there are no capital gains.
Can someone give me more info on this?
NikkiJuly 23, 2019
Hi Shane,
Thanks for your question.
Yes, if you are on pension and sell your SMSF home, you’ll be exempted from paying capital gains tax.
Borrowing with an SMSF differs slightly from regular home loan borrowing, so it’s sometimes a good idea to speak to a mortgage broker or find out about any SMSF training your lender may be offering. The main difference is that an SMSF mortgage is more difficult to process, with fines of over $200,000 applying to trustees if their arrangements aren’t properly structured. We have a page that carefully explains how you can refinance your SMSF loan.
Hope this was helpful. Don’t hesitate to message us back if you have more questions.
Best,
Nikki
JudeSeptember 16, 2014
Do all lenders have a required $ balance to be in the super fund?
BrianNovember 24, 2016
Will any lenders lend 90% to purchase a home through smsf
Finder
MayNovember 24, 2016Finder
Hi Brian,
Thank you for your question and for contacting Finder.
Your loan-to-value ratio (LVR) would depend on the lender, the type of property and its value. LVR is usually computed as the price of the property divided by the size of the deposit or equity in the home.
Please note that the higher the LVR, the riskier they are to a lender. This is because a lender likes borrowers who have greater equity in their property.
Hope this helps.
Cheers,
May
Finder
MarcSeptember 17, 2014Finder
Hi Jude,
Thanks for the question.
Not every home loan will have a required balance in your SMSF to be eligible. You may wish to contact a mortgage broker to discuss SMSF home loans that may suit your current SMSF balance and investment strategy.
Home loan cashback deals can help you refinance to a cheaper interest rate and get a lump sum cash payment. Compare the latest deals and check your eligibility today.
Find a great deal on a variable interest rate home loan from lenders large and small. Start comparing and saving today.
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Easy answers, without any calls. We know fixing is a big deal, but checking you're options and rates shouldn't have to be. We speak to home owners every month, and have put over 50 hours in creating this guide.
Rates obsessed. We track big banks, small banks, credit unions and digital banks because whether you're fixing up for 1 year or 3, even 1 decimal place could save you big bucks (without getting annoying calls!).
Ready in any market .Lending rates verified from 180+ products day and night. Whether you're buying for the first time, or remembered refinacing at 3am - our rates are up-to-date.
I would like to re-finance my SMSF loan of 247k.
Also, I read on this page that if I go into pension phase and sell my SMSF residential home there are no capital gains.
Can someone give me more info on this?
Hi Shane,
Thanks for your question.
Yes, if you are on pension and sell your SMSF home, you’ll be exempted from paying capital gains tax.
Borrowing with an SMSF differs slightly from regular home loan borrowing, so it’s sometimes a good idea to speak to a mortgage broker or find out about any SMSF training your lender may be offering. The main difference is that an SMSF mortgage is more difficult to process, with fines of over $200,000 applying to trustees if their arrangements aren’t properly structured. We have a page that carefully explains how you can refinance your SMSF loan.
Hope this was helpful. Don’t hesitate to message us back if you have more questions.
Best,
Nikki
Do all lenders have a required $ balance to be in the super fund?
Will any lenders lend 90% to purchase a home through smsf
Hi Brian,
Thank you for your question and for contacting Finder.
Your loan-to-value ratio (LVR) would depend on the lender, the type of property and its value. LVR is usually computed as the price of the property divided by the size of the deposit or equity in the home.
Please note that the higher the LVR, the riskier they are to a lender. This is because a lender likes borrowers who have greater equity in their property.
Hope this helps.
Cheers,
May
Hi Jude,
Thanks for the question.
Not every home loan will have a required balance in your SMSF to be eligible. You may wish to contact a mortgage broker to discuss SMSF home loans that may suit your current SMSF balance and investment strategy.
I hope this helps,
Marc