Wondering whether you can refinance a private loan to an SMSF loan?
The answer is yes, but the process is more challenging than standard home loan refinancing, especially without professional assistance. With limited lenders offering this specialised service and strict eligibility criteria, applying for a refinance loan within a Self-Managed Super Fund (SMSF) structure requires experience and a well-planned strategy. So, let us help you with a quick guide.
What Is an SMSF Loan Refinance?
A refinance loan for an SMSF involves replacing your existing private loan or SMSF loan with a new one. It is a viable move to get a better interest rate, extend the loan term, or change lenders due to restrictive conditions. If your current lender has reduced SMSF support or you’re paying above-market rates, refinancing may help you reduce costs and improve flexibility.
While refinancing private loans within your SMSF is possible, it’s especially crucial to review the original loan agreement and compliance with ATO regulations. Always be careful when transferring to a traditional bank, though they may provide more favourable rates and improved cash flow. Also, not all banks offer SMSF refinancing and those that do assess applications under commercial or business lending rules—even when the property is residential.
Am I Eligible to Refinance My SMSF Loan?
As mentioned, only a select number of lenders offer SMSF loan refinance options, and their approval policies are stricter and tighter than private or traditional investment property loans. Here’s what you’ll likely need to qualify:
Eligibility Requirements:
Borrow up to 80% of the property’s value
The maximum loan-to-value ratio (LVR) is usually 80%, which means all refinancing costs must also fall within this threshold.
Standard residential or commercial property
Properties must be standard builds, ideally in metropolitan areas. This applies to SMSF property loan refinances and new purchases.
Liquidity requirements
Some lenders require you to retain 10–20% of the property value in liquid assets (e.g., cash or shares) post-settlement. Others have more flexible benchmarks.
Interest-only options
Interest-only repayments may be available but typically only to lower-risk borrowers who are not approaching retirement.
30-year loan terms
Most lenders now offer long-term SMSF loan options of up to 30 years, helping ease monthly cash flow pressure within the fund.
How Do Lenders Assess SMSF Loan Refinance Applications?
Banks and lenders assess your loan for SMSF refinance based on the income and status of your super fund. You may have to provide the following documents in full to clarify or strengthen your application:
- – SMSF trust deed and custodian trust deed
- – Two years of audited SMSF tax returns and financials
- – An accountant’s letter confirming the trustee company is not trading
- – Rental income statements (if applicable)
- – Proof of liquidity (cash or accessible assets)
- – Fund income tax and regulatory returns
Here’s some all-time advice: submitting these documents accurately and upfront can noticeably reduce delays.
Understanding Liquidity Requirements
Liquidity refers to how much your SMSF will have as accessible assets post-refinance. For example, on a $700,000 property:
- – Some lenders may require over $200,000 in cash or liquid assets remaining in your fund.
- – Others may accept a lower threshold of around $70,000, depending on your risk profile.
At SMSF Loan Experts, we know which lenders offer flexible policies—essential if you’re still building wealth or don’t want your liquidity tied up.
Basic Costs of Refinancing an SMSF Loan
Banks rarely compete on SMSF loan pricing. That’s because SMSF lending is niche, complex, and handled by small, specialised teams. Still, refinancing costs may include:
- – Application fees
- – Exit/discharge fees from your current lender
- – Valuation fee
- – Settlement and legal fees
- – Government registration fees
- – Break costs (if exiting during a fixed rate term)
- – Ongoing annual or monthly account fees
Every lender charges differently, which is why comparing SMSF loan refinance options through an expert broker is key to your success in this refinancing journey.
Fixed vs Variable: Which SMSF Loan Rate Is Right?
It’s best to contemplate thoroughly with your SMSF experts before choosing between a fixed or variable SMSF loan, depending on your fund’s long-term strategy and your stage of life.
Fixed rate – More stability, especially in low-interest environments; ideal for long-term planners aged 30–45.
Variable rate – More flexibility; suitable for those nearing retirement or expecting interest rate drops.
Always consult a financial adviser or SMSF specialist before locking in a strategy that will stick with you in the long run. Also, dedicate four to six weeks from loan application to the settlement. SMSF refinancing takes longer than a standard loan refinance due to the additional legal checks. Again, to reduce turnaround time, have all your documents ready and up-to-date.
Let Us Assist with SMSF Loan Refinancing
At SMSF Loan Experts, we understand the structure of SMSFs, the complexity of refinancing, and how to present your fund in the best possible light to potential lenders. Simply put, our team can assist you in refinancing private loans within your SMSF without hassle.
Want to find out if you’re eligible to refinance your SMSF loan?
Contact us today to consult our specialists to help you in this journey.
