A Self-Managed Super Fund (SMSF) loan allows you to use your SMSF savings to borrow money for purchasing an investment property. it’s worth noting that SMSFs also have the flexibility to utilize borrowed funds for acquiring commercial properties. This versatility makes SMSF home loans an attractive option for savvy investors looking to diversify their superannuation asset mix.

An SMSF loan is a property loan specifically designed for SMSFs. Unlike traditional home loans, it operates within the framework of an SMSF. Any rental income or capital gains from the investment property go back into the fund.

To get an SMSF loan, you must set up an SMSF that meets Australian Taxation Office (ATO) requirements. You’ll need an investment property in mind that aligns with your SMSF’s strategy.

Once your strategy and resources are sufficient, set up a separate trust (a ‘bare trust’) to hold the property secured from a third-party lender. Investment returns generated from this asset benefit your SMSF. SMSFs loans are typically structured as Limited Recourse Borrowing Arrangements (LRBAs). This unique setup offers a layer of protection for your superannuation assets. In the event that you face difficulties in meeting your loan repayments, the lender’s recourse is limited to the specific property purchased with the loan, safeguarding the other assets within your super fund. This arrangement ensures that the remainder of your SMSF investments remains secure.