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Refinancing an SMSF home loan

Refinancing an SMSF investment mortgage could save you a whole lot of money, but make sure you research your options before choosing the right loan for your financial situation.

You can buy an investment property through your self-managed super fund (SMSF). This requires an SMSF home loan. Like other home loans, you can refinance this loan if you want to switch to a better or more suitable product. But refinancing a SMSF home loan is trickier than an ordinary refinance.

There aren't many lenders now who lend to SMSF borrowers. And finding one that will accept refinancers is even harder. But it can be done. Keep in mind that when setting up a SMSF trust or making big changes (like refinancing) you should get professional advice from a tax agent or financial advisor.

Why refinance an SMSF home loan?

The main benefit of refinancing an SMSF home loan is the same as refinancing any other home loan — getting a more affordable deal. If your loan has a high interest rate attached and there are other similar loans available on the market offering lower rates, you could save thousands over the life of the loan by switching. Alternatively, you could switch to a loan that offers different and more flexible features.

How to refinance an SMSF home loan

SMSF loans work differently to most home loans. When applying for a new one, you will need to review all the eligibility requirements carefully and make sure the loan is suitable for your investment needs.

Some lenders may have additional criteria for refinancers as opposed to new SMSF borrowers. It's important to check this before completing a full application.

You will also need to gather a lot of paperwork to support your application. While specific paperwork differs by lender it generally includes:

  • Tax returns for the SMSF trust
  • SMSF Trust Deed
  • Custodian Trust Deed
  • Bank statements or audited financial statements

Finder survey: On average, how long (in days) do people consider and research refinancing before applying?

1 - 2 weeks2.37%1.73%
1 - 3 months1.69%1.35%
4 - 7 days0.51%1.35%
3 - 4 weeks1.19%0.77%
3+ months0.85%
2 or 3 days0.51%0.77%
Within 1 day0.19%
Source: Finder survey by Pure Profile of 1112 Australians, December 2023

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6 tips for refinancing an SMSF home loan

  1. Check the terms and conditions. You should always read the fine print closely when making an important financial decision, and SMSF loans regularly come with a wide range of terms and conditions attached. These conditions can include everything from the minimum required amount of funds held in the SMSF to details surrounding the purchase of the property, so make sure you’re familiar with these conditions before you decide to refinance.
  2. Don't forget the ATO requirements. According to ATO rules, refinancing the loan must not increase the amount you are borrowing against the property. The refinancing arrangement must be solely used to replace an earlier arrangement, and the trustee must not acquire legal ownership of the property while transferring to the new loan. It’s also worth noting that the loan cannot be used to ‘improve’ an asset, although repairs to a property are allowed. A range of other rules and restrictions apply to SMSF loans and all the technical jargon can get quite confusing, so seeking expert advice is recommended.
  3. Look at the loan's interest rate. The interest rate that applies to the amount you borrow has a huge impact on the total cost of the loan, so compare interest rates offered by a range of lenders. What is the average rate on the market today? How much money could you save on repayments if you were to refinance to a loan with a better rate? Consider whether switching from a variable to a fixed interest rate (or vice versa) could be beneficial.
  4. Factor in fees and charges. SMSF loans come with more fees than ordinary loans. Before switching, check what fees and charges apply to your current SMSF home loan and how do they compare to the charges on other loans? How much could you save in ongoing fees if you switched loans?
  5. Calculate switching costs. When considering the potential financial benefits of refinancing your SMSF loan, you need to weigh up those benefits against the cost involved in refinancing. For example, check if discharge or break fees apply if you switch to a new loan. You’ll also need to consider the cost of setting up the new financing arrangement, including application, establishment and legal fees. Calculate the cost of refinancing your SMSF home loan.
  6. Get help. Managing an SMSF investment strategy is a complex and involved process, so consider speaking to a specialist SMSF advisor. Getting professional advice tailored to your specific financial needs can be crucial to the success of your investments.

Setting up an SMSF home loan is a time-consuming process. SMSF loan applications take significantly longer to be processed than applications for ordinary home loans. There are several requirements that need to be met, such as choosing a custodian for the property. Refinancing may have many advantages for you, but the process takes time to complete.

You need to weigh up whether the time and effort to refinance the loan is worth it.

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2 Responses

    Default Gravatar
    carrieSeptember 16, 2017

    I have a unit purchased by super without loan,can I refinance this property ?

      Default Gravatar
      MariaSeptember 17, 2017

      Hey Carrie,

      Thank you for reaching out to us.

      While it’s possible to refinance SMSF home loan, there are several factors to consider and this page is a guide on that.

      You may also want to consider getting professional advice that fits your financial situation that would aid you in your decision.

      Before applying, please ensure that you meet the eligibility criteria and requirements and to read the details, as well as the relevant Product Disclosure Statements/ Terms and Conditions of the option before making a decision and consider whether the product is right for you.


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