SMSF Mortgage Brokers in Brisbane
Buying property through a Self-Managed Super Fund (SMSF) is a legitimate investment strategy used by thousands of Australians. But it’s also one of the most structurally complex areas of property finance, and getting it wrong can have serious consequences, including ATO penalties of up to approximately $200,000 for trustees who breach the rules.
As a specialist SMSF mortgage broker in Brisbane, Woodrow Finance works closely with clients, their accountants, and SMSF specialists to properly structure these transactions. This page covers the key mechanics, rules, and requirements you need to understand before we sit down together.
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The LRBA: The Only Way an SMSF Can Borrow
An SMSF cannot take out a standard home loan or investment mortgage. The only borrowing structure permitted under superannuation law is a Limited Recourse Borrowing Arrangement (LRBA).
Here’s what that means:
- Your SMSF borrows money to purchase a single asset (a property)
- The property is held in a separate legal entity called a Bare Trust (or Custodian Trust) during the loan period
- The lender’s recourse is limited to that single asset; they cannot pursue other assets held in the SMSF if the loan defaults
- Once the loan is fully repaid, the property is transferred from the Bare Trust into the SMSF itself
The LRBA structure is ATO-regulated under the Superannuation Industry (Supervision) Act (SIS Act). Every element of the setup must be correct. This is not a transaction to navigate without specialist SMSF lending guidance.
The Lender Landscape for SMSF Loans
This is important context before you start comparing rates: the major banks (the Big 4) exited the SMSF lending market in 2018. SMSF loans are now offered exclusively by a specialist lender market, typically non-bank lenders, credit unions, and second-tier institutions.
This means that:
- Rates are higher than standard home loans, typically 0.5% to 1.5% above standard variable rates
- Minimum loan sizes generally start around $200,000
- Fewer lenders to choose from, which makes having a Brisbane SMSF mortgage broker with the right lender relationships important
Our team of SMSF mortgage brokers at Woodrow Finance maintains active relationships with lenders in this space and knows which lenders suit different fund types, property types, and loan amounts.
Deposit Requirements and LVR
SMSF lending has stricter deposit requirements than standard investment lending.
| Property Type | Minimum Deposit | Maximum LVR |
| Residential | 20% | 80% |
| Commercial | 25-35% | 65-75% |
In addition to the deposit, lenders typically require the SMSF to retain a liquidity buffer within the fund after settlement to demonstrate that the fund can continue meeting its obligations (contributions, expenses, repayments) without being forced to sell the asset. The exact buffer required varies by lender.
This is one of the reasons SMSF property loans work better for funds with meaningful existing balances than for funds with recently established balances.
The Structural Requirements
Before any SMSF commercial or residential property loan can proceed, several structural elements need to be in place. Your SMSF specialist or accountant will typically handle these, but here's what's required so you understand what's involved.
SMSF Trust Deed
Your fund's governing document must be up to date and permit borrowing. Older trust deeds may not include LRBA provisions and may need to be updated.
Corporate Trustee
Most lenders require the SMSF to have a corporate trustee (a company) rather than individual trustees. If your fund currently has individual trustees, this must change before a loan can proceed.
Bare Trust / Custodian Trust
A separate legal entity must be established to hold the property during the loan term. This entity has no purpose other than holding the asset on behalf of the SMSF.
Updated SMSF Investment Strategy
Your fund's investment strategy document must be updated to reflect the proposed property investment and confirm it is appropriate for the fund's objectives.
Residential vs Commercial: Different Rules Apply
The type of property you purchase through your SMSF significantly affects what you can and can’t do with it.
Residential Property
- The Sole Purpose Test applies: the property must be held for the sole purpose of providing retirement benefits to fund members
- Fund members and related parties cannot live in or rent a residential property held by the SMSF, not even at market rent
- The property must be leased to unrelated third parties through a standard arm’s-length arrangement
Commercial Property
The rules are more flexible here, which is why commercial property is popular with business owners.
- A Business Real Property Exemption applies: members’ own businesses can lease commercial property held by the SMSF, provided it is at market rent under a formal lease agreement
- This means a dentist, for example, could have their SMSF purchase the practice premises and pay rent to their own fund
- This rent is received as income by the fund, contributing to retirement savings in a tax-advantaged environment
This is an area where your accountant’s advice is essential. Our SMSF commercial property loan expertise covers both residential and commercial scenarios.
SMSF Lending: Part of a Broader Strategy
SMSF property loans don't exist in isolation. It sits alongside decisions about your personal property, including investment property loans Brisbane, self-employed home loan applications, and home loans for doctors who often use SMSF structures for practice premises.
Our Brisbane finance broker team works across all of these areas, so we can look at your full picture and ensure your lending strategy is coherent across both. We also assist with land and construction loans, refinance mortgage broker services, car finance broker needs, and first home buyer mortgage broker support for clients earlier in their property journey.
Book an SMSF Lending Consultation
Book a consultation with our SMSF mortgage broker Brisbane team today. We'll work through your fund's current position, the property you're considering, and whether the LRBA structure is the right path for your goals.
Call (07) 2111 1294 or submit your details below to get started.
SMSF lending is regulated under the SIS Act and overseen by the ATO. Trustee obligations and penalties apply. This content is educational in nature and does not constitute financial, legal, or tax advice. Woodrow Finance operates under ASIC regulations and MFAA Best Interests Duty.
Always engage a qualified SMSF accountant or specialist before proceeding with an SMSF property transaction.
Our Team
Get to know the qualified brokers and finance specialists behind Woodrow Finance. We help everyday Australians understand their lending options and feel confident about the home loan and finance journey.
Daniel
Founder & Mortgage Broker
Founder of Woodrow Finance, delivering tailored advice with transparency and fast, personalised service.
Baxter
Mortgage Broker
Seven-plus years' experience, specialising in self-employed and investment lending plus first-home and construction loans.
Nathaniel
Finance Specialist
Qualified Finance Specialist helping first-home buyers, investors and refinancers find tailored finance solutions.
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FAQs
Can I use my existing superannuation balance to fund an SMSF property purchase?
Yes, your existing super balance can be used as the deposit (subject to the fund’s liquid assets and the minimum deposit requirements). However, the fund must retain a liquidity buffer after settlement, so the full balance cannot be used as a deposit.
What are the setup costs involved?
Establishing the LRBA structure involves legal costs for the Bare Trust, potential SMSF trust deed amendments, corporate trustee setup (if required), and stamp duty on the property purchase. Costs vary by state and structure. Your accountant and solicitor will provide detailed estimates, and factor these into your total acquisition cost from the start.
Can I renovate a property held in my SMSF?
Yes and no. Cosmetic maintenance and repairs are permitted. However, improvements that change the character of the asset are generally not permitted while the LRBA is in place. Once the loan is repaid and the property has been transferred to the SMSF, improvements are permissible.
What happens if the fund runs short of cash to make repayments?
Under an LRBA, the lender’s recourse is limited to the property held in the Bare Trust. Other fund assets are protected. However, if the fund cannot make repayments, the lender can ultimately take possession of the property. Maintaining adequate liquidity in the fund is an ongoing responsibility of the trustees.
What's the process for selling an SMSF property?
The property can be sold in the normal way. Proceeds are returned to the fund and managed in accordance with the SMSF’s investment strategy. Capital gains tax concessions may apply depending on the fund’s phase (accumulation vs pension). Your accountant will manage the tax treatment.