Home Loans for SMSF Trustees in South West Sydney, NSW, The SMSF Lending Guide
If you're an SMSF trustee who has been reading about property inside super, you've probably landed on some confusing information lately. The rules changed on 10 August 2026, and a lot of guides online haven't caught up. What that means for you depends entirely on what you already hold and what you're planning to do next.
The ban on new residential Limited Recourse Borrowing Arrangements is now law. But refinancing an existing residential LRBA is still available, commercial property borrowing is completely unaffected, and buying residential property inside an SMSF using cash (no borrowing) remains an option. The picture is narrower than it was, but it's not closed.
Our team helps SMSF trustees across South West Sydney, NSW work through which lending pathway still applies to their fund, comparing options across 40+ lenders. The SMSF lending side of this is genuinely specialised, and the lender panel for it is much narrower than residential lending.
Key takeaways
- New residential LRBAs inside an SMSF are banned from 10 August 2026.
- Existing residential LRBAs are fully grandfathered and can still be refinanced.
- Commercial property LRBAs remain fully available with no restriction.
Can SMSF trustees still borrow to buy property in South West Sydney, NSW?
The answer depends on what type of property and whether it's a new or existing arrangement. From 10 August 2026, an SMSF can no longer enter a new Limited Recourse Borrowing Arrangement to acquire residential property. If your fund already holds a residential LRBA, it's fully grandfathered: no forced sale, no compliance problem, and refinancing to a better rate is still permitted. Commercial property borrowing inside an SMSF is completely unaffected by the change. A South West Sydney broker who understands the specialist SMSF lender panel can confirm which pathway applies to your fund's specific position.
What property can an SMSF still borrow to buy?
The ban applies only to new residential LRBAs. Everything outside that category remains open, and there's more available than most trustees realise.
What's still available inside an SMSF:
- › Commercial property LRBAs: fully available, no restriction. Buying the premises your business operates from is the strongest SMSF commercial profile.
- › Refinancing an existing residential LRBA: still permitted, including switching to a different lender for a better rate or structure.
- › Cash purchase of residential property: an SMSF with sufficient balance can still buy residential property using cash with no borrowing, and the rules around this are unchanged.
- › Contracts signed before 10 August 2026: a binding contract entered before that date is protected under the transitional provisions, even if settlement occurs later.
"The most common situation I see is a trustee who has held a residential LRBA for several years and hasn't looked at the rate since it was set up. The fund is grandfathered, the loan can be refinanced, and the rate is almost always well above what a specialist lender would offer today. That's a conversation that's almost always worth having."
Dimitri Giannopoulos · Director, Infinity Mortgage Brokers · Chat to Dimitri →
How do lenders assess an SMSF loan application?
SMSF lending is assessed differently from personal borrowing. The lender is looking at the fund, not you personally, and the criteria reflect that. The major banks exited this market in 2018 and 2019, so the assessment comes from specialist and second-tier lenders, each with their own credit policy.
What lenders assess on an SMSF application:
- › Fund balance: most lenders want to see a minimum balance of $200,000 to $300,000, and the fund must retain a liquidity buffer of roughly 10% of the loan or 5% to 10% of the asset value after settlement.
- › LVR: maximum LVR for a residential refinance typically runs 65% to 80%. Commercial LRBAs typically sit at 60% to 70%.
- › Rental income: assessed at 70% to 80% of gross rent. Property holding costs are added on top when calculating serviceability.
- › Fund structure: the loan must be structured as a Limited Recourse Borrowing Arrangement under the SIS Act 1993, with a bare trust holding the asset during the loan term.
- › Sole purpose test: the property cannot be lived in or rented to a fund member or related party at any point. This is assessed as part of compliance, not just at settlement.
Source: Australian Taxation Office.
What does an SMSF loan cost, and what deposit does the fund need?
SMSF loans are priced at a premium over standard investment lending, typically running roughly 1% to 2% higher than a comparable residential investment loan. The deposit requirement is also higher: at a maximum LVR of 70% to 80% on residential and 60% to 70% on commercial, the fund needs to contribute 20% to 40% of the purchase price plus costs before a lender will consider the application.
LMI is rarely available at the top end of the LVR range for SMSF loans, and some lenders cap the loan size by security value. A fund buying commercial premises in the Liverpool CBD precinct or near the Moorebank intermodal area would be assessed differently from a fund refinancing a residential property in Revesby or Padstow, because the asset class, the tenant profile and the LVR policy all differ.
For trustees who hold commercial property, the loan assessment leans heavily on the lease quality, the remaining lease term and the business's ability to service the debt from within the fund. Owner-occupier commercial borrowing, where the fund owns the premises the trustee's own business uses, is the strongest profile a specialist lender sees.
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When does SMSF property borrowing not make sense?
The ban on new residential LRBAs has narrowed the field considerably, but even before August 2026, SMSF property borrowing wasn't the right move for every fund. For smaller funds, the deposit requirement, the higher loan rate and the ongoing compliance costs of maintaining a bare trust can erode the return that made the strategy attractive in the first place. A fund with $250,000 in balance buying a property at 70% LVR has very little liquidity left for contributions, unexpected costs or market movements.
Commercial property inside an SMSF makes the most sense where the trustee's business is the tenant, because the rent stays inside the fund rather than going to a third-party landlord. Where there's no business tenancy connection, the case for commercial borrowing inside super rests on the fund's long-term investment strategy, which is a conversation for your SMSF adviser and accountant, not a broker.
SMSF property strategy is tax and superannuation advice. A broker's role here is the lending structure, the lender match and the application. For the question of whether property belongs in the fund at all, your accountant and SMSF adviser are the right starting point.
What approval challenges do SMSF trustees face?
Where SMSF applications run into difficulty:
- › Narrow lender panel: the major banks don't write new SMSF loans. The panel is specialist and second-tier lenders, each with different policies on LVR, minimum fund balance and acceptable asset types. Applying to the wrong lender creates a credit enquiry with no outcome.
- › Bare trust structure: the property must be held in a bare trust during the loan term. If the legal structure isn't set up correctly before settlement, the lender won't proceed. This is a legal requirement, not a paperwork formality.
- › Liquidity after settlement: lenders want to see the fund retain roughly 10% of the loan as a cash buffer post-settlement. A fund that exhausts its liquid assets to meet the deposit will usually be declined regardless of the property's value.
- › Misreading the grandfathering rules: a trustee who signed a contract before 10 August 2026 has transitional protection. One who did not, and is now trying to proceed with a new residential LRBA, does not. Getting the date and the documentation right matters before any application goes in.
- › Related-party leasing: a fund member or related party cannot rent the property. Where a trustee is planning to use the property personally, even temporarily, the sole purpose test fails and the loan won't settle.
"Where I'd push trustees to move quickly is on refinancing an existing residential LRBA. The grandfathering is solid, but the lending market for these arrangements is thinner than it was, and that's unlikely to improve. The trustees who lock in a better rate structure now have more options than those who wait."
Dimitri Giannopoulos · Director, Infinity Mortgage Brokers · Chat to Dimitri →
How do mortgage brokers help SMSF trustees in South West Sydney, NSW?
The lender choice decides most of the outcome here. Three policy differences move the result for SMSF trustees, and they're not published side by side anywhere.
- › Minimum balance threshold: some specialist lenders set their floor at $200,000, others at $300,000. For a fund sitting between those numbers, the first lender says yes and the second says no.
- › Commercial LVR policy: lenders differ on how they assess commercial assets by location and tenant type. A logistics or industrial property near the Moorebank intermodal precinct with a long lease is assessed differently from a retail premises with a short-term tenant.
- › Refinance flexibility on existing LRBAs: not every specialist lender is equally willing to take on a refinance of an existing residential arrangement, particularly where the original lender's loan documentation is non-standard. Knowing which lenders will look at the file before applying prevents wasted enquiries.
Comparing across the specialist panel before any application is lodged is the single most useful thing a broker does in this space.
How to get SMSF lending right in South West Sydney, NSW, step by step
Step 1: Talk to us
We start by working out what your fund holds, whether the ban affects your plans, and which lending pathway, refinancing an existing arrangement or commercial borrowing, applies to your situation.
Step 2: Confirm the fund's structure and compliance position
We work through your fund balance, the bare trust structure and the liquidity position with you, coordinating with your SMSF accountant so the application goes in with the right documentation the first time.
Step 3: Match to a specialist lender and submit
We identify which lenders on the specialist panel will look at your file given the fund's balance, the asset type and the LVR, and submit to the right one rather than the obvious one.
Step 4: Manage the approval through to settlement
SMSF settlements have more moving parts than standard residential settlements. We coordinate between the lender, the bare trust solicitor and your SMSF adviser to keep the timeline on track.
Frequently Asked Questions
Can an SMSF still borrow to buy residential property?
No, not for a new purchase. From 10 August 2026, new LRBAs to acquire residential property are banned. Existing residential LRBAs are fully grandfathered and can be refinanced; commercial property LRBAs remain completely unaffected.
Can I refinance my SMSF's existing home loan to a better rate?
Yes. Refinancing an existing residential LRBA is still permitted, including switching to a different specialist lender. The grandfathering applies to the arrangement, not the lender holding it.
Is commercial property in an SMSF affected by the new rules?
No. The ban applies only to new residential LRBAs. Commercial property LRBAs, including buying business premises your fund or your business occupies, are completely unaffected and remain fully available.
What deposit does an SMSF need to borrow?
Most specialist lenders require a deposit of 20% to 40% of the purchase price, depending on the asset type and lender policy, plus the fund must retain a liquidity buffer of roughly 10% of the loan after settlement.
Can an SMSF trustee live in or rent a property the fund owns?
No. The sole purpose test prohibits a fund member or related party from using or renting a property held by the fund. Breaching this rule creates a compliance risk for the fund regardless of when the property was acquired.
Should I use a mortgage broker or go direct to an SMSF lender?
A mortgage broker, every time. The SMSF lender panel is narrow and the policies differ significantly between lenders on minimum fund balance, acceptable LVR and commercial asset types. Applying directly without knowing the panel means applying to the wrong lender and getting a credit enquiry with no approval to show for it.
Your Next Steps
Getting your SMSF lending right as a trustee in South West Sydney means knowing which pathway is actually open to your fund before any application goes in. Whether you're refinancing an existing residential arrangement, looking at commercial borrowing, or working out what the August 2026 changes mean for your plans, the lender you approach and the structure you use matter more than the rate.
Ready to find out which lenders will work best for your SMSF situation? Contact the Infinity Mortgage Brokers team or call 0426 955 190. We'll canvas our 40+ lender panel and find the most suitable options for your circumstances.
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External Resources
Infinity Mortgage Brokers, Bankstown and South West Sydney. This website is general information only and does not constitute financial advice. Please consider your own circumstances and seek professional advice before making any financial decisions.
