SMSF Loan Rates and Lenders: What to Expect
SMSF loans usually cost more than standard investment loans, and fewer lenders offer them. Knowing why, and what drives the rate you are offered, helps you compare properly.
Why SMSF rates are higher
- The lender’s claim is limited to the one property, so its risk is higher
- The loans take more work to assess and set up
- There are fewer lenders, so less competition
Many of the big banks stopped SMSF lending some years ago. Most SMSF loans now come from specialist and non-bank lenders, plus some smaller banks.
What affects your rate
- Loan to value ratio (LVR): a bigger deposit usually means a lower rate
- Residential or commercial: commercial SMSF loans are often priced differently
- The fund’s strength: balance, contributions and the buffer left after settlement
- Loan type: principal and interest, interest only, fixed or variable
- Loan term: many SMSF loans have shorter maximum terms than home loans
Look past the rate
The cheapest rate isn’t always the best loan. Compare:
- Set-up fees, valuation fees and ongoing fees
- How much the lender will lend and on what property types
- Minimum fund balance and buffer rules
- Whether offset accounts or extra repayments are allowed
- Exit and break costs, especially on fixed rates
Also factor in the costs outside the loan, such as setting up the holding trust and legal fees.
How we compare SMSF lenders
We compare SMSF lenders on our panel against your fund’s numbers and the property you want. We show you the total cost, not just the headline rate, and explain the trade-offs in plain English. Read SMSF loan eligibility or go back to SMSF loans.
FAQs
Can I refinance an SMSF loan?
Yes, an existing LRBA loan can often be refinanced to another SMSF lender, as long as the structure stays compliant. We check this with you and your accountant.
Can I get an offset account?
Some SMSF lenders offer one, and money in it must belong to the fund.
Fixed or variable?
Both are available with some lenders. Fixed gives certainty but can be costly to break if you sell.
Albert Waldron is a Credit Representative (407514) of Australian Finance Group Ltd, Australian Credit Licence 389087. This is general information only and does not take into account your personal circumstances. Please seek advice before acting. SMSF loans are complex. We arrange the loan only. Get advice from a licensed financial adviser and your accountant about whether an SMSF or property investment suits you. Tax information is general; speak to your accountant.