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Fixed SMSF home loans

Enjoy the security of a fixed rate and raise the funds you need to buy an investment property with a fixed self-managed super fund (SMSF) home loan.

For many Australians, purchasing a property through your SMSF is becoming an increasingly popular option. Taking this approach gives you a cost-effective way to buy an investment property, while at the same time giving you control over how you use your superannuation funds. Though these loans are also available with variable interest rates, this article focuses on fixed SMSF home loans.

Please note that all the information on this page should be considered as general advice and does not take into account your financial situation. Please see your trusted accountant for more information regarding your SMSF.

Compare SMSF home loans in the table below

This table contains fixed and variable SMSF home loans, as there are not many of these products on the market. Note that Finder does not currently have a partnership with some of the providers listed in this table. If you wish to apply for one of these products you can contact the lender directly.

Data indicated here is updated regularly
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Loan purpose
Offset account
Loan type
Repayment type
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Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
Liberty Financial SMSF
5.20%
5.63%
From $495
$30 monthly ($360 p.a.)
75%
A self-managed super fund loan from Liberty Financial. Available with a 20% deposit.
Freedom Lend Variable SMSF - LVR 70% (IO)
5.49%
5.64%
$1,645
$395 p.a.
70%
A flexible SMSF home loan with interest-only repayments. 100% offset account attached.
Freedom Lend Variable SMSF - LVR 65% (IO)
5.29%
5.44%
$1,645
$395 p.a.
65%
Interest-only SMSF home loan with flexible repayments. Includes a 100% offset account.
Freedom Lend Variable SMSF - LVR 75% (P&I)
5.29%
5.82%
$1,645
$395 p.a.
75%
A flexible SMSF home loan for investment and refinance. 100% offset account attached.
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Applications are subject to approval. Conditions, fees and charges apply. Please note that you need to be an Australian citizen or permanent resident to apply.

Credit services for Aussie Select, Aussie Activate and Aussie Elevate products are provided by AHL Investments Pty Ltd ACN 105 265 861 (“Aussie”) and its appointed credit representatives, Australian Credit Licence 246786. Credit for Aussie Select products is provided by Residential Mortgage Group Pty Ltd ACN 152 378 133, Australian Credit Licence 414133 (“RMG”). RMG is a wholly-owned subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL and Australian Credit Licence 234945. Credit for Aussie Activate products is provided by Pepper Finance Corporation Limited ACN 094 317 647 (“Pepper”). Pepper Group Limited ACN 094 317 665, Australian Credit Licence 286655 acts on behalf of Pepper. Credit services for Aussie Elevate products are provided by AHL Investments Pty Ltd ACN 105 265 861 Australian Credit Licence 246786 (“Aussie”) and its appointed credit representatives. Aussie is a trade mark of AHL Investments Pty Ltd ABN 27 105 265 861. Credit and any applicable offset accounts for Aussie Elevate are issued by Bendigo and Adelaide Bank Limited ABN 11 068 049 178 AFSL / Australian Credit Licence 237879.

Aussie is a trade mark of AHL Investments Pty Ltd. Aussie is a subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124. ©2020 AHL Investments Pty Ltd ABN 27 105 265 861 Australian Credit Licence 246786.

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What is a fixed SMSF home loan?

These types of loans allow you to borrow money through your SMSF to purchase an investment property. If you already have an SMSF account set up and are looking to buy a investment property, this option lets you use your super funds the way you want to. Once you’ve retired, you’ll then be eligible to live in the home you have purchased.

These loans are almost identical to regular home loans in that you borrow an amount to buy a home and you then have to pay that amount back over a fixed period, but fixed SMSF home loans tend to attract higher rates. SMSF home loans are also limited recourse loans, which means the amount your lender can recover from you is limited to the value of the property you purchase. In other words, if you default on your loan, your lender can’t seize any other assets in your SMSF.

These loans also have much more complicated structures and compliance processes than normal home loans so aren’t offered by every lender. Your best bet when searching for a fixed SMSF home loan may be to approach a big bank or major financial institution.

How do these mortgages work?

An SMSF is a self-managed super fund that has less than five members. They allow you to take control of your super assets and look after how your funds are managed. Australians are allowed to borrow money to purchase property through their super funds, which is where SMSF home loans come into the picture.

Once you’ve found a property you wish to buy, you’ll need to decide who will act as custodian of the property. The custodian will hold the property title on your behalf until you have paid off the loan amount. Once you’ve applied and been approved for a loan, the property is put up as security and you can begin making repayments and enjoy the security of a fixed rate. You can also start collecting rent from the property and will need to cover any day-to-day property expenses that arise. If the rental income doesn’t cover your repayments, the rest can be managed via your SMSF contributions. Once you’ve paid off the loan in full, the property title is transferred to the SMSF.


How to compare the features in an SMSF loan

  • Interest rates. The interest rate your loan attracts will affect the amount you have to repay, so look for a loan with a competitive rate.
  • Fees and charges. Just like with any other home loan, you’ll need to keep an eye out for hidden fees and charges. Common fees include application fees, annual fees, valuation fees, legal fees, establishment fees and rate lock fees.
  • Maximum loan amount. Compare the Loan-to-Value Ratios (LVRs) of competing loans to determine the percentage of a property’s value that you will be allowed to borrow.
  • Loan restrictions. As these are quite complex financial products, different lenders will impose different restrictions on the loans they offer. For example, your loan may only be able to be used to purchase a residential investment property. Make sure you’re aware of exactly what your loan can and cannot be used for.
  • Flexible repayment options. Does your loan let you choose between weekly, fortnightly or monthly repayments? Can you make interest-only or principal and interest repayments? Find out your repayment options before you apply.
  • Loan term. Compare how long each loan lets you lock in a fixed-rate period for.
  • Eligibility criteria. Some loans will attract specific eligibility criteria, such as the need to have a certain minimum amount of assets in your SMSF before you can take out a loan.

Pros and cons of fixed rate SMSF mortgages

Pros

  • Buy a property through your SMSF. These loans let you take control of your superannuation and purchase your next investment property sooner.
  • Security of a fixed rate. A fixed interest rate means you have the security of locking in your interest rate for a fixed period of time and are able to plan your repayments.
  • No risk to other SMSF assets. As these are limited recourse loans, if you default on the loan your lender cannot seize any other SMSF assets other than the asset which is the object of the loan.

Cons

  • Higher rates and legal fees. Fixed SMSF home loans attract higher rates and much higher legal fees than regular home loans.
  • Smaller range. There is nowhere near as large a range of SMSF home loans available as there is regular home loans, meaning less choice for borrowers.

Things to consider before you apply for a fixed rate SMSF home loan

Just like with any home loan, you need to make sure you borrow an amount you can afford to pay back. With this in mind, take note of the interest rate and fees attached to your loan before you sign up. SMSF loans are also quite difficult to process compared to a regular loan, so trustees can incur fines of over $200,000 if their loan arrangement isn’t structured properly.

Finally, borrowers should be aware that there are a range of restrictions that apply to borrowing money and buying a property through a SMSF. For example, the asset you plan on purchasing has to be one the SMSF could legally buy if it had the necessary funds. In addition, remember that you can’t use a SMSF home loan to construct a new home, nor can you live in the home at any stage until you become a pensioner.


Frequently asked questions about fixed SMSF mortgages

The interest rates and fees on a SMSF home loan are higher than on a regular home loan. In particular, you can expect to pay much more in legal fees.

This means that if you default on your loan, the lender can’t seize any of your SMSF assets other than the asset which was the security for the loan.

This will vary between loans and lenders, but the maximum LVR allowed under a fixed SMSF home loan is 80%.

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Athena Liberate Home Loan - 70% to 80% LVR Owner Occupier, P&I (*now 2.59%, drops to 2.54% on 30 Sep)

A competitive variable rate mortgage for owner occupiers $0 application and $0 ongoing fees. This interest rate falls over time as you pay off the loan. This rate will drop to 2.54% p.a on 30 September 2020 for new and existing customers. You can get this rate if you apply today.

Logo for UBank UHomeLoan Variable Rate - Discount Offer for Owner Occupiers, Variable P&I Rate
UBank UHomeLoan Variable Rate - Discount Offer for Owner Occupiers, Variable P&I Rate

Take advantage of a low-fee mortgage with a special interest rate of just 2.49% p.a. and a 2.49% p.a. comparison rate.

Logo for HSBC Home Value Loan - Promotional Offer (Owner Occupier P&I)
HSBC Home Value Loan - Promotional Offer (Owner Occupier P&I)

Get a low interest rate loan with no ongoing fees. Plus you can make extra repayments and free redraw online.

Logo for ME Flexible Home Loan Fixed with Members Package - 2 Year Fixed Rate LVR ≤ 80% (Owner Occupier, P&I)
ME Flexible Home Loan Fixed with Members Package - 2 Year Fixed Rate LVR ≤ 80% (Owner Occupier, P&I)

Lock in a competitive rate for owner occupiers for two years. Comes with a 100% offset account.

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