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SMSF Residential Lending

Invest in residential property through your super — the right way

Self-Managed Super Funds (SMSFs) offer a powerful way to grow your retirement wealth — and yes, that can include residential property. But SMSF lending is highly regulated and structurally complex. It’s essential to get the right advice and lending structure from the outset.

At Heritage Finance, we guide trustees through every stage of the SMSF lending process — from lender selection to loan structuring — ensuring your strategy remains compliant, tax-effective, and aligned with your retirement goals.

Whether you’re upgrading machinery, replacing aging assets, or expanding into new markets — we’re here to help you get the equipment you need without compromising cash flow.

What can your SMSF purchase?

You can use your SMSF to buy residential investment property — but there are strict rules:

Permitted:

  • Residential properties purchased solely for investment purposes
  • Off-the-plan or established homes (if for investment use only)
  • Properties purchased at arm’s length from unrelated parties

Not Permitted:

  • Buying property you intend to live in now or in retirement
  • Buying from or renting to related parties (in most cases)
  • Renovations that change the property’s nature before the loan is repaid

SMSFs cannot buy a property to live in or use. The investment must meet the sole purpose test: growing retirement savings.

Understanding liquidity and lending limitations

Most SMSF loans require a higher deposit (typically 20–30%), and lenders will closely assess your fund’s liquidity — that is, your ability to cover loan repayments, operating costs, and legal obligations without relying on external contributions.

You’ll need to demonstrate:

  • Sufficient cash reserves post-settlement

  • Regular super contributions from members

  • Strong serviceability across the loan term

At Heritage Finance, we work with lenders who specialise in SMSF lending and understand how to evaluate super fund income — giving you more options and smoother approvals.

What is a Bare or Custodial Trust?

When borrowing through your SMSF, you’ll need to set up a Limited Recourse Borrowing Arrangement (LRBA). This is a legal structure that protects the fund’s other assets in case of loan default.

As part of this, the property must be held in a Bare Trust (also known as a Custodial Trust). Here’s how it works:

  • The Bare Trustee holds the legal title to the property

  • Your SMSF holds the beneficial interest

  • Once the loan is repaid, legal title is transferred to the SMSF

This structure ensures the lender’s recourse is limited to the property itself — not the entire fund.

Setting up the right structure is critical. We work alongside your accountant or financial adviser to ensure compliance from the start.

How Heritage Finance helps with SMSF lending

  • Work with lenders who specialise in SMSF loans

  • Connect you with trusted legal partners to set up Bare Trusts

  • Ensure your fund’s liquidity and serviceability meet lending requirements

  • Provide clear, compliant loan structures aligned to ATO and SIS Act regulations

Help you plan for long-term property strategy within your fund

Ready to explore SMSF property lending?

Whether you’re an experienced investor or just starting to explore your SMSF’s potential, we’re here to guide you through every step — from pre-approval to post-settlement.

Book a confidential SMSF lending consultation today.

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