SMSF loans cost more because the lender takes more risk with more paperwork. The loan is limited recourse, the borrower is a trust structure rather than a person, and the compliance work is heavier. Some of that you can reduce; some is the price of the structure.
Current as at September 2026.
Quick answer: SMSF loans cost more than standard investment loans because the lender is taking more risk with more paperwork. The loan is limited recourse (the lender’s claim on the fund is limited to the one property, though members are commonly asked to guarantee), the borrower is the fund’s trustee rather than a person, and the compliance work is heavier. That shows up in the rate and the fees, and in setup costs that don’t exist on a normal mortgage. Some of it you can reduce. Some of it is the price of the structure.
Since 10 August 2026 new SMSF borrowing is for business real property only, and existing residential SMSF loans can be refinanced. Both of those are where the cost conversation now sits.
Why do SMSF loans cost more?
Limited recourse. On a standard loan, if the property sells for less than the debt, the lender can pursue the borrower for the shortfall, but on an SMSF loan, under the limited recourse borrowing arrangement rules, the lender’s rights are limited to the asset held in the holding trust, so the lender wears more of the downside (a member’s personal guarantee, which most lenders ask for, is the usual backstop) and prices for it, and that isn’t something any broker can negotiate away.
The borrower is a structure. A separate trustee holds title, and the members are typically guarantors. The lender has to review the fund’s trust deed, the holding trust deed, the investment strategy, the fund’s financials and the members’ contribution history before it assesses anything, which is hours of work a payslip loan doesn’t need.
Small market. In our experience the big banks largely don’t do this (NAB’s “super” product is margin lending for shares, not property). The lenders that do are specialists, so there’s less price competition than in the mainstream mortgage market.
Compliance risk to the lender. If the structure is wrong, the fund can end up non-complying. Lenders manage that with legal review, which costs, and they pass it on.
What are the costs, itemised?
Setup you’d pay anyway. Fund establishment, trust deed, ASIC registration for a corporate trustee. These come with having an SMSF at all.
Setup specific to borrowing. A holding (bare) trust deed. One SMSF document provider quotes bare trust establishment at $880 to $1,495. Legal review of the loan documents by the fund’s solicitor. The lender’s own application and legal fees, which on SMSF products tend to be higher than on standard loans.
Valuation. The lender’s valuation of the property. Commercial valuations, which most business real property purchases now need, cost more than residential ones.
The rate. Higher than an equivalent standard investment loan. How much higher depends on the lender, the LVR, whether it’s business real property or a residential refinance, and the fund’s strength. We don’t print rates because any figure would be out of date and would mislead, so ask a broker for current ones for a specific fund.
Ongoing. More for the fund’s annual audit and accounting once there’s a property, a loan and a holding trust to cover. Any ongoing lender fees. Some lenders re-test the fund’s liquidity during the loan (Granite publishes that it doesn’t), and that’s administrative time even when nothing changes.
Exit. Discharge fees, and when the loan is repaid there’s a legal step to move title out of the holding trust, which has a cost.
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How to reduce them
Not all of these apply to every fund, and a few are decisions for your accountant and adviser rather than us.
Get the structure right before signing. The most expensive SMSF mistake we see is a contract signed in the wrong name. Who signs the contract depends on the holding trust structure and state law, and fixing it after exchange is costly. Get your solicitor to check it before you sign anything.
Borrow a smaller share of the price. Eighty percent is the maximum LVR most SMSF lenders publish, and lenders generally price lower LVRs better. A bigger fund contribution to the purchase reduces both the loan and its price.
Keep liquidity comfortable. Lenders want a cash buffer after settlement. A fund that clears the buffer easily is a stronger application and stronger applications get better terms. Lender requirements differ by fund, and we compare the published SMSF products in Which lenders offer SMSF loans.
Check whether an existing loan is still competitive. If the fund has a residential LRBA written before 10 August 2026, refinancing it is explicitly permitted under the ATO‘s guidance. A lot of these loans were written years ago and never reviewed. The loyalty problem the ACCC measured on ordinary mortgages in 2020 (older loans paying more than new ones) has no reason to skip SMSF loans.
Choose the lender for fit as well as rate. Whether a lender re-tests liquidity during the loan (some publish that they don’t) affects the fund’s administrative cost every year. A lender with a lower minimum loan size or a policy that suits the fund’s contribution pattern saves a declined application. On SMSF loans, the headline rate and the cost over the life of the loan can point to different products.
Use a broker who does these regularly. The SMSF lenders we deal with work through brokers. An application built the way the lender’s policy expects gets assessed faster and with fewer questions, and questions on SMSF files turn into legal fees.
If you want current numbers for a specific fund, or a review of an existing SMSF loan, call 02 9037 2825. We run these alongside your accountant and adviser.
This is general information only, current as at September 2026. It doesn’t consider your circumstances and isn’t financial, tax or legal advice. Fees and rates vary by lender and change without notice. Whether an SMSF or property within it suits you is a matter for a licensed financial adviser and your accountant.
Frequently Asked Questions: SMSF Loan Costs
Why are SMSF loan rates higher?
The loan is limited recourse and the borrower is a trust structure, so lenders price for the extra risk and work.
Can I refinance an SMSF loan after 10 August 2026?
Yes. The ATO lists refinancing of existing LRBAs as unaffected by the change.
How does an SMSF keep borrowing costs down?
A lower LVR and a comfortable liquidity buffer help most, and the structure needs to be right before anything is signed.
Related reading
- SMSF Lending Isn’t What Your Bank Says It Is
- SMSF Loans Explained: How They Actually Work After 10 August 2026
- Can You Use Your Super to Buy a House?
- More on SMSF lending
Book a broker or find a broker near you. Or call the Burwood office on 02 9037 2825.
General information only. This article does not take your objectives, financial situation or needs into account, and is not financial product, tax or legal advice. Lending criteria, fees and rates vary by lender and change without notice. Loan Lounge, Australian Credit Licence 515608.