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Self-managed super funds give Australians a level of control over their retirement savings that other fund types simply do not offer. One of the most significant decisions an SMSF trustee can make is whether to use the fund to acquire property through a borrowing arrangement. At Balcombe Financial, we work with clients across Bayside, Victoria and throughout Australia to help them understand how SMSF loans work and what to consider before taking that step.
What Is an SMSF Loan?
An SMSF loan, also called a Limited Recourse Borrowing Arrangement or LRBA, is the mechanism that allows a self-managed super fund to borrow money to acquire an asset. Under a Limited Recourse Borrowing Arrangement, the asset is held in a separate holding trust, sometimes called an SMSF bare trust, while the fund holds the beneficial interest. Legal ownership transfers to the fund once the loan is fully repaid. If the loan defaults, the lender's recourse is limited to the asset held in that trust, which means other fund assets are protected.
The LRBA structure is governed by sections 67A and 67B of the Superannuation Industry (Supervision) Act 1993. Borrowing is generally prohibited for superannuation funds, but the LRBA provides a lawful exception. Every SMSF loan must comply with the conditions set out in that legislation, and all investments must satisfy the SMSF sole purpose test under section 62, which requires the fund to be maintained solely to provide retirement benefits to its members.
Important Changes From 10 August 2026
The rules around SMSF loans changed significantly from 10 August 2026. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received Royal Assent on 26 June 2026 and inserted a new condition into subsection 67A(2) of the SIS Act. From 10 August 2026, new LRBAs entered into to purchase real property can only be used to acquire business real property. This means new residential loan refinance arrangements and new residential property acquisitions through an LRBA are no longer permitted for arrangements entered into on or after that date.
Existing residential LRBAs in place before 10 August 2026 are not affected. Trustees with a compliant residential LRBA already established can continue to hold that property and can refinance to another lender without the refinanced arrangement being treated as a new post-commencement arrangement. Transitional protections also apply where a binding contract to acquire real property was exchanged before 10 August 2026, even if settlement occurs after that date. As at 10 August 2026, the ATO was still updating certain guidance pages to reflect the new rules. Balcombe Financial strongly encourages all clients to seek advice from a licensed SMSF specialist before acting on any information about these changes.
SMSF Commercial Loans
For many business owners and investors, the most compelling use of an SMSF loan today is to buy a commercial property with super. An SMSF commercial loan allows the fund to acquire business real property, which is generally defined as land and buildings used wholly and exclusively in one or more businesses. The business using the property does not need to be the same entity that holds the interest in the property.
One of the most practical applications is where a business owner uses their SMSF to purchase the premises from which their own business operates. The business then leases the property from the fund at arm's length, on commercial terms consistent with market value. This arrangement must comply with the in-house asset rules and the related party leasing provisions under the SIS Act. Business real property leased between the fund and a related party is excluded from the in-house asset rules, provided the lease is on arm's length terms.
Using super to buy a commercial investment property can be a meaningful strategy for those whose circumstances suit it. Rental income received by the fund is generally taxed at the concessional rate of 15 percent in the accumulation phase, and SMSF rental income tax treatment in pension phase may attract further concessions through the exempt current pension income rules. Where a property has been held for at least 12 months and a CGT event occurs, the SMSF CGT discount of one-third may apply in accumulation phase, potentially reducing the effective tax rate on the capital gain to 10 percent. The actual outcome depends on the fund's specific circumstances, including its cost base, any capital losses, and its overall tax position for that year.
Division 296 Tax and Larger Balances
From 1 July 2026, members with a total superannuation balance exceeding $3 million at the end of the financial year may be subject to Division 296 tax of 15 percent on the proportion of earnings attributable to the amount above that threshold. For SMSF purposes, an unrealised increase in property value does not by itself constitute a CGT event and does not produce Division 296 fund earnings. Rental income and realised capital gains may contribute to the calculation. LRBA amounts are disregarded when calculating a member's total superannuation balance for Division 296 purposes. Funds may also elect to adjust the cost base of CGT assets to market value as at 30 June 2026 for Division 296 fund earnings purposes, recognising value accrued before the new tax commenced.
Loan Structure and Lender Considerations
SMSF loans are offered by a range of banks and non-bank lenders, and the terms can vary considerably. Loan LVR and deposit requirements differ between lenders and between residential and commercial security types. Variable rate and SMSF fixed rate options are available depending on the lender and the nature of the security. The ATO publishes safe harbour interest rates under PCG 2016/5 for related party LRBAs, and income from arrangements that do not meet arm's length terms may be assessed as non-arm's length income and taxed at 45 percent.
As an SMSF mortgage broker, Balcombe Financial can help you compare SMSF lenders across our panel to identify structures and loan interest rates that suit your fund's situation. We work with clients considering both commercial property loans and investment loans through their SMSF, and we take the time to understand your fund's position before making any recommendations. Our role is to help you understand your borrowing capacity within the SMSF context and connect you with lenders whose products align with your fund's needs, while ensuring you have the right professional support around you.
Step 1: Initial Conversation
We start with a relaxed, no-obligation chat to understand your situation, your goals, and what you're looking to achieve. No paperwork, no pressure.
Step 2: Fact Find & Assessment
We take a closer look at your finances, including income, expenses, assets and liabilities, so we can understand your borrowing position and tailor our approach accordingly.
Step 3: Loan Strategy & Lender Selection
Drawing on our panel of over 40 lenders, we identify the most suitable options for your circumstances and present you with clear, comparable recommendations.
Step 4: Application Preparation
Once you're happy with the direction, we prepare and package your application thoroughly, making sure everything is in order before anything is submitted to a lender.
Step 5: Lodgement & Approval
We lodge your application and manage the process with the lender from start to finish, keeping you updated along the way so you're never left wondering what's happening.
Step 6: Formal Approval & Signing
Once your loan is formally approved, we walk you through the loan documents so you understand exactly what you're signing and what comes next.
Step 7: Settlement & Beyond
We stay with you through to settlement and beyond. Whether you have questions down the track or your circumstances change, we're always here to help.
Balcombe Financial has been absolutely helpful throughout the process of my construction loan. Amazingly proffesional and responsive. Michael is full of knowledge and knows his proffesion very well. Would highly recommend Balcombe Financial. Thank you Michael.
James O'Haire
We were extremely happy with the service and outcomes provided by Michael Flinos and Balcombe Financial. Michael gave us confidence early in the process as he worked with us to understand the complexity of our portfolio of loans. Michael then found solutions that best suited our needs, provided considerable savings and improved our flexibility. We are thrilled with the refinancing outcomes Michael enabled us to achieve and are we pleased to have Balcombe Financial as one of our trusted advisors. In addition to the excellent outcomes Michael was great to work with and helped us maintain momentum when the other challenges of life distracted us. In our next project with Balcombe Financial Michael is assisting us with a new project and our overall financing strategy. Very professional, client focussed, easy to work with and highly recommended.
Andrew O'Brien
Michael was fantastic to deal with and got my complicated financials sorted out and finance approved without any fuss. Would highly recommend.
Terry Wheeler
I have known Michael Flinos for more than a decade. Michael is a true Professional who is an authentic, subject matter expert in his domain and has great knowledge in the Financial services space and is extremely thorough and diligent. In all my dealings with Michael, I have been impressed with his knowledge, his ability to research products which are fit for purpose and his can do nature. He has a friendly and polite demeanor and is always prepared to go the extra nine yards to get the job done. I would not hesitate to recommend Michael's services to anyone who is looking for a commercially compelling solution to their requirements.
Bill Keramidas
The timeframe for a home loan application can vary depending on the lender, the complexity of your situation, and how quickly supporting documents are provided. In general, once a formal application is submitted, lenders may take anywhere from a few days to a few weeks to assess and provide a decision. At Balcombe Financial, we work to keep the process moving as efficiently as possible by preparing your application thoroughly from the start and staying in regular contact with the lender on your behalf. We will keep you updated throughout the process so you always know where things stand and what to expect next.
Absolutely. Buying your first home is one of the biggest financial decisions you will ever make, and it can feel overwhelming when you are not sure where to start. At Balcombe Financial, we work with first home buyers regularly and understand the questions and concerns that come with the process. We take the time to explain how home loans work, what to expect at each stage, and what government grants or schemes you may be eligible to explore. We do not make assumptions about what you already know, and we are always happy to answer questions no matter how basic they may seem. Our aim is to make sure you feel prepared and supported.
A mortgage broker acts as the link between you and a range of lenders, including banks, credit unions, and non-bank lenders. Rather than you having to approach each lender individually, a mortgage broker does the legwork on your behalf. At Balcombe Financial, we take the time to understand your personal situation, your goals, and your financial position before researching loan options that may suit your needs. We handle the paperwork, communicate with lenders, and guide you through each step of the process. Our role is to make the home loan process more manageable and to help you feel informed and confident at every stage.
While the exact documents required can vary depending on your situation and the lender, there are some common items that most applications will require. These typically include proof of identity such as a passport or driver's licence, recent payslips or tax returns to confirm your income, bank statements showing your savings and expenses, and details of any existing debts or liabilities. If you are self-employed, you may need to provide additional documentation such as business financial statements or tax assessments. At Balcombe Financial, we will walk you through exactly what is needed for your specific application so you can gather everything in an organised way and avoid unnecessary delays.
Balcombe Financial assists clients with a broad range of lending needs. This includes home loans for owner-occupiers, investment property loans, refinancing existing loans, construction loans, and loans for self-employed individuals. We also assist with commercial lending for business owners. Whether you are purchasing your first home, looking to grow a property portfolio, or exploring options for your business, we can help you understand what may be available to you. Every client's situation is different, so we always start with a conversation to understand your specific needs before exploring what options might be worth considering.
When you go directly to a bank, you only see the products that particular bank offers. At Balcombe Financial, we work with a wide range of lenders, which means we can present you with a broader selection of loan options to compare. We take the time to understand your circumstances and help you weigh up your choices in a way that makes sense for your situation. Beyond that, we handle much of the communication and administration involved in applying for a loan, which can save you a significant amount of time and effort. Our goal is to make sure you feel supported and well-informed throughout the entire process.
Not at all. While Balcombe Financial is based in Bayside, Victoria, we work with clients right across Australia. Thanks to phone, email, and video calls, we are able to provide the same level of personalised service to clients regardless of where they are located. Whether you are in regional Victoria, interstate, or anywhere else in the country, we are well-equipped to assist you with your lending needs. We believe that access to quality mortgage broking support should not be limited by geography, and we are committed to making ourselves available and accessible to clients no matter where they call home.
Refinancing means replacing your existing home loan with a new one, either with your current lender or a different one. People refinance for a variety of reasons, such as looking for a loan with different features, consolidating debt, or accessing equity in their property for renovations or other purposes. Whether refinancing makes sense for your situation depends on a number of factors, including your current loan terms, any fees involved in switching, and your financial goals. At Balcombe Financial, we can help you review your current loan and compare it against other options so you can make an informed decision. We will always be upfront about the costs and considerations involved.
A fixed rate home loan locks in your repayment amount for a set period, which means your repayments stay the same regardless of any changes in the broader lending environment during that time. This can make budgeting more predictable. A variable rate loan, on the other hand, can change over time in line with lender decisions, which means your repayments may go up or down. Some loans also offer a split option, where part of your loan is fixed and part is variable. Each option has its own advantages and trade-offs depending on your circumstances and priorities. At Balcombe Financial, we can help you understand the differences and think through which structure may suit your needs.
In most cases, our mortgage broking service comes at no direct cost to you as the client. Balcombe Financial is typically paid a commission by the lender once your loan settles. We are required by law to be transparent about how we are paid, and we will always disclose this information to you clearly before you proceed. This means you can access our knowledge, support, and lender connections without paying out of pocket for the service. If there are any situations where a fee may apply, we will always discuss this with you upfront so there are no surprises along the way.
SMSF loans involve complex legislation, strict compliance requirements, and significant financial decisions. The team at Balcombe Financial is here to help you understand your options and connect you with the right lenders for your fund's circumstances. Book an appointment today to get started.
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