Super Fund Loans

An SMSF is a private Superannuation Fund that you manage yourself. Members of an SMSF are responsible for making the decisions on what to invest in. Some people use their SMSF to invest in Property.

Borrowing (taking out a loan) to assist the purchase of a property is termed ‘super borrowing’. This has become a popular strategy in recent times since changes to the super rules which allow borrowing to invest, otherwise referred to as gearing or leveraging.

The loan arrangement must be set up under a ‘limited recourse borrowing arrangement’ this means the lenders rights are limited to the asset (being the property) and not any of the other assets held within the fund. There is a good illustration of this in the video from the ATO below:

We have a number of lenders who will provide funds for these type of transactions and the criteria can differ from lender to lender.

It’s crucial to ensure the structure of the lending is done correctly from the outset.