SMSF Lenders in Australia: Who Still Lends to SMSFs?

Before 2018, the major Australian banks were significant participants in the SMSF lending market. The Royal Commission led most of them to exit or significantly restrict their SMSF loan products, citing complexity and compliance concerns. Most have not returned.

Today, if you want to borrow in your SMSF to purchase property, you are primarily dealing with specialist non-bank lenders. Understanding what they require, what they charge, and how they assess applications is essential before starting the process.

This article provides general information. SMSF strategy requires a licensed SMSF adviser, accountant, and solicitor.

Who Is Currently Active in SMSF Lending

The SMSF lending market consists of:

Specialist non-bank lenders: The dominant segment. These lenders have built SMSF lending as a core product and understand the LRBA structure, bare trust requirements, and fund documentation needs. They charge higher rates than standard investment loans, reflecting the complexity and legal overhead of the structure.

Some second-tier banks and regional lenders: A small number of second-tier banks have maintained SMSF loan products. Their requirements are typically similar to specialist non-bank lenders in terms of documentation and fund balance minimums.

Major retail banks: Most have either exited the SMSF lending market or restricted their products significantly. A small number maintain limited SMSF loan products for existing customers or under specific conditions. These are not reliable as a primary source of SMSF finance, and their policies can change without notice.

The active lender landscape changes. A lender active in SMSF lending today may change their policy in 12 months. A broker with current, active SMSF lending relationships across multiple lenders provides more reliable market access than going directly to a single institution.

What SMSF Loan Rates Look Like

SMSF loan interest rates are typically 0.3–0.8% higher than equivalent standard investment loan rates. This premium reflects the legal complexity of the LRBA structure, the additional documentation the lender must assess and retain, and the limited recourse nature of the security.

On a $500,000 SMSF loan, a 0.5% rate premium costs approximately $2,500 per year in additional interest compared to a standard investment loan. Over a 10-year hold period, this adds approximately $27,500 in additional interest cost before any rate changes are modelled.

This cost is real and should be included in any investment return projection.

Fees and rates vary by lender and are subject to change — confirm current pricing with your broker.

LVR limits vary by lender and are subject to individual assessment.

Talk to Key Choice Lending about your options.

Key Choice Lending has access to 72+ lenders and has supported Australian borrowers through more than $1 billion in transactions. Founder Matthew Clark is a two-time Amazon bestselling author and Better Business Awards winner. Book a Strategy Session — no obligation, focused on your situation.

Documentation SMSF Lenders Require

SMSF loan applications require substantially more documentation than standard investment loan applications. Prepare the following before approaching any lender:

Fund documents:

• SMSF trust deed (original and any subsequent amendments)
• SMSF investment strategy document — must specifically permit borrowing and property investment
• SMSF audited financial statements for the last 2 years
• SMSF tax returns for the last 2 years
• Current SMSF bank account statements (3–6 months)
• Evidence of current fund balance

Bare trust documents:

• Bare trust deed — must be established by a solicitor before contract exchange
• Bare trustee identity documentation

Trustee documents (individual trustees):

• Individual trustee identification (passport, driver's licence)
• Personal tax returns for the last 2 years
• Evidence of personal income and financial position for guarantee assessment
• Personal guarantee documentation (signed by all trustees)

Property documents:

• Signed contract of sale
• Rental appraisal from an independent property manager
• Building and pest inspection report
• Body corporate information (for strata properties)

Personal Guarantee Requirements

Almost every SMSF lender requires personal guarantees from the fund's individual trustees. This is a significant point that many SMSF property investors do not fully appreciate at the outset.

The limited recourse nature of the LRBA protects the SMSF's other assets from the lender's claim. But the personal guarantee means the trustees — as individuals — are personally liable for the loan if the fund cannot service it.

The personal guarantee effectively removes the limited recourse protection at the trustee level. If the property is repossessed and sold at a loss, the lender can pursue the guarantors personally for any shortfall.

This does not make SMSF borrowing inadvisable. But it means the "limited recourse" label does not provide as much personal protection as some investors assume.

Tax treatment varies by individual circumstance — speak with your accountant before making any decisions based on tax considerations.

The Most Useful Question to Ask a Broker Before Starting

Ask: which lenders are currently active in SMSF lending, what is their current maximum LVR for the property type and fund balance I have, and what is their current interest rate?

The answers change more frequently in the SMSF lending market than in any other lending category. A broker who has submitted an SMSF application in the last 30 days has more current market knowledge than any general-purpose comparison tool.

The right lender for your SMSF is the lender whose current policy, documentation requirements, and rate structure best matches your fund's specific position — not the lender with the lowest headline rate who may not currently accept SMSF applications at all.

Book a Strategy Session. Make the Move.