SMSF
SMSF property lending, explained
Lending to a self-managed super fund is assessed differently to a personal loan - the fund is the borrower, the property is held on a holding trust, and the lender's recourse stops at that asset. Here's how it works.
A self-managed super fund can borrow to acquire or refinance commercial, industrial or business-use property, structured so the fund itself - not the members personally - is the borrower under a compliant limited recourse borrowing arrangement. That structure changes what a lender assesses and how the loan is repaid.
What's different about lending to an SMSF
- The fund is the legal borrower, and the members' personal income is not what the loan is written against
- The property is bought and held by a separate trustee on a holding trust, not by the fund directly
- The arrangement must be compliant, and the fund's deed has to permit the borrowing in the first place
- The lender's recourse is limited to the acquired asset, so no other fund asset is exposed if the arrangement fails
How Alphacon assesses an SMSF deal
Alphacon lends from $200,000 to $5,000,000 against business real property held inside an SMSF, up to 70% LVR, over 6 to 60 months. There is no servicing test. The assessment sits on the property, the LVR and how the facility is repaid at the end of the term - a refinance to a long-term SMSF lender, or a paydown from contributions and rollovers. Interest is paid monthly by the fund or prepaid at settlement.
An SMSF loan here is underwritten on the property and the way the facility is repaid - not on what the members earn outside the fund.
Where this fits, and where it doesn't
SMSF property lending suits a fund acquiring a commercial property - including one leased back to a related business, structured on commercial arm's-length terms - or refinancing an existing facility to a lender that better understands the structure. It's not a way to access personal credit through the fund; the borrowing and the asset both sit inside the superannuation structure, governed by its own compliance rules.
Done properly, SMSF property lending lets a fund build a commercial property holding using its own resources - a genuinely different proposition to personal lending, and one that has to be structured before the contract rather than after it.
Property lending built for SMSF structures
Alphacon lends $200,000 to $5,000,000 against business real property held in a self-managed super fund, to 70% LVR, from 9.95% p.a.
SMSF commercial property loans, in fullGeneral information only
This article is general in nature and does not take your circumstances into account. It is not financial or credit advice. Alphacon Capital writes business-purpose loans secured by property.
