SMSF Loans & Refinancing

Buy property through your SMSF or switch from an existing high-interest loan by refinancing.

I want to buy a residential property through my SMSF.

Support your retirement through rental income and ongoing property appreciation.

I want to buy a commercial property through my SMSF.

Invest in standard commercial real estate like offices and retail, or acquire specialised properties like service stations.

I want to refinance an
existing SMSF loan.

Switch from a high-interest grandfathered loan to one that helps you save more for retirement.

Refinance an Existing SMSF Mortgage

When was the last time you checked the interest rate on your SMSF mortgage? 

If you’re like many SMSF borrowers, you’re probably paying more than you need to. 

The Big Four and most other first-tier banks don’t offer SMSF refinancing, which might mean your interest rate has slowly been creeping up year after year. 

But you do have options. 

With more than 9 specialised SMSF lenders on our panel, our lending strategists can help you refinance to a loan with a lower interest rate. 

That means better cash flow for your SMSF – and more funding for your post-retirement lifestyle. 

Schedule a free 30-minute consultation to find out how we can help. 

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What Is a ‘Grandfathered’ SMSF Loan?

Following the Royal Commission into banking, most banks stopped issuing SMSF loans. 

Existing customers continued to have their loans supported – but, with no competition in the market and no way to refinance, their interest rates kept rising. 

In some cases, these ‘grandfathered’ loans reached rates upwards of 9% per annum. 

Today, 16 bank and non-bank lenders offer new SMSF loans and refinancing, giving customers a pathway to more affordable rates. 

Think you might be paying too much in repayments on your SMSF loan? 

Talk to one of our lending strategists about your options. 

More Than Just Refinancing

Access Specialised Lenders

Paying upwards of 9% p.a. for an SMSF loan doesn’t make sense.

Access loans from more than [x] specialised lenders on our panel and start saving more for your retirement.

Develop a Strategy

Refinancing your SMSF loan isn’t just about a lower interest rate.

It’s a step towards your long-term retirement objectives, which is why the right lending structure and a proper borrowing strategy are so important.

Connect With Advisers

To invest successfully and comply with super laws, you need the right people around you.

Our lending strategists can connect you with essential professionals like SMSF and tax specialists – and, with no financial relationships involved, you know you’re getting an honest referral.

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Our clients share their experiences of transformation and growth.

Our journey with ALIC started 5 to 6 years ago when we purchased land and subsequently built our first home. Since then, we have continued our association with them, and it has proven to be a decision we do not regret. Their team not only provided financial guidance but also helped us build our wealth through a well-thought-out investment portfolio.

Trusting someone with your finances is a crucial decision, and ALIC has consistently demonstrated reliability. Their approach goes beyond transactional relationships; it's about building a lasting partnership.
Sascha Hossain
February 2024
There are lenders, banks and brokers, and then there is ALIC. Kevin Agent and his team are amazing in finding solutions for your business or personal needs. They helped me establish my business, sorted out my home loan and savings and helped me buy my new home without any stress or worry and financially my family has never been better.

Look no further than the Australian Lending & Investments Centre. No one better and highly recommended.
James Tamanika
January 2024
Natasha has been an exceptional mortgage broker for us for the last decade. We have come to rely on her expertise implicitly and trust her completely. She has impressive efficiency. She always gives personalised guidance that suits our circumstances (which are complex), and she is honest when she thinks something is not a good idea. Lastly, she is so friendly and such a great communicator that every interaction is easy and enjoyable.

We've recommended Tash to all of our friends who have sought mortgages and they would all write something similar. Highly recommend.
Rebecca Foskey
January 2024

How Does SMSF Refinancing Work?

SMSF loan refinancing is like refinancing a standard loan – with a few extra requirements. 

You, your broker, and your SMSF adviser will need to make sure that your new loan falls under the same limited recourse borrowing arrangement (LRBA) as your original loan. 

You also won’t be able to borrow more than your original loan or leverage your equity to do things like renovate your property. 

Finally, you’ll also need your broker’s help to find a lender that offers SMSF refinancing. 

Most first-tier lenders don’t, and even some SMSF lenders might be wary about refinancing commercial properties classed as ‘specialised securities’. 

Schedule a free consultation to find out more about how we can help. 

Learn From Leading Australian Brokers

With articles written by award-winning brokers like Mark Davis, ALIC’s Insights Hub is one of the best places to learn about building wealth through property. 

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Questions About SMSF Refinancing

How much could I save by refinancing my existing SMSF loan?

Exactly how much you can save by switching to a new lender depends on your personal circumstances. 

Here’s an example. If your SMSF held a $400,000 mortgage on an $800,000 residential property at 9.5% p.a. with a 25-year term, and you refinanced to 6.9% p.a., you would save $520 per month (excluding fees). Over five years, that’s $31,200 in savings – money that your fund could invest to support your retirement.         

You can use our calculator or talk to one of our lending strategists for more information about how much you could save. 

What are the benefits of acquiring commercial property via my SMSF?

Any asset acquired by your SMSF must meet the sole purpose test – that is, your investment can only be made for the sole purpose of supporting your and other fund members’ retirements. You, your friends, and your family (‘related entities’) can’t benefit financially from a property that your SMSF acquires. It’s why you can’t live in a residential property owned by your SMSF – or rent it to, buy it from, or sell it to people you know.   

But there are exceptions to the sole purpose test. When a property is used wholly or exclusively in one or more businesses (‘the business use test’), it can be purchased from, sold to, or leased to a related entity. The main requirement: any transactions must occur at ‘arm’s length’ – that is, under the same terms that would be reasonable if you and the lessee/buyer/seller didn’t know each other. 

If you own a business, you may be able to acquire your business premises and lease them to your business on arm’s length terms – which means your business’s rent is paid into your SMSF and taxed at a concessional rate. (You must have an enforceable lease agreement in place between your SMSF and the business in question.) 

The other exception to the sole purpose test is for a property that is used in one or more primary production businesses. That property won’t fail the business use test on the basis of both of the below being true: 

  • an area of the property (two hectares or less) contains a dwelling used primarily for domestic or private purposes 
  • the area is also used primarily for domestic or private purposes. 

Keep in mind that the above information is general and purely informational in nature. It is not super, tax or financial advice and should not be interpreted or used as such. For personalised advice, contact our team for a referral to an accredited super or financial adviser.  

Why don’t most banks offer SMSF loans anymore?

Following the Banking Royal Commission of 2017–19, most first-tier lenders – including the Big Four – exited the SMSF lending space.  

SMSF loans were already relatively risky for lenders. Because an SMSF can only acquire a property under an LRBA, that property must be held in a separate trust – which means, if the SMSF is unable to meet its loan obligations, the lender has ‘limited recourse’ and is only able to recoup losses from the asset held in that trust. (Some SMSF properties are also specialised securities, which creates an additional layer of risk for lenders.)     

The Royal Commission placed increased scrutiny on lenders’ compliance with relevant laws, and, as a result, almost all first-tier lenders decided that issuing new SMSF loans was no longer commercially viable. 

Since 2019, though, various second- and third-tier lenders have begun offering SMSF loans again. A lower compliance burden means that those lenders have a greater appetite for SMSF lending, including the refinancing of existing loans that were ‘grandfathered’ when first-tier lenders exited the space. 

You can read more about the history of SMSF loans here.

Can I refinance to leverage equity in a property owned by my SMSF?

No, you can’t. Section 67A of the Superannuation Industry (Supervision) Act 1993 (Cth) is clear that, while you can refinance an SMSF mortgage, you can only refinance the amount you borrowed plus interest and expenses (such as stamp duty and conveyancing fees). For example, if your fund borrowed 70% of a property’s value, it couldn’t refinance to borrow 80%.   

You also can’t accrue equity and then leverage that equity to do things like put down a deposit on a new property or improve your asset. Limited recourse borrowing arrangements (LRBAs), which are the vehicles through which SMSFs can borrow money, can only be established in relation to single acquirable assets. (Acquirable assets are defined in the legislation, but don’t include property improvements.) One LRBA can borrow money for one property – that’s all. 

Keep in mind that SMSF refinancing is legally complex with lots of grey areas. For advice specific to your situation, contact us for a referral to an appropriately qualified financial or SMSF adviser. 

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