Borrowing inside an SMSF isn’t just a loan transaction — it’s a strategic move that can shape a member’s long-term retirement outcomes. And long before the loan application is lodged, advisers play an essential role in making sure the strategy stacks up.
A successful SMSF borrowing strategy requires advisers to understand:
· How the asset fits within the fund’s broader investment strategy
· Whether it’s residential or commercial property
· Opportunities for business owners to hold their premises as Business Real Property inside the SMSF
But strategy is only part of the puzzle. Advisers often provide the greatest value by helping trustees stay compliant. The right structuring, documentation and clarity around responsibilities can be the difference between a robust SMSF loan and a problematic one. Early collaboration with a mortgage broker makes this even easier, ensuring trustees understand both their lending options and their compliance obligations.
Is an SMSF Loan Really ‘Set and Forget’?
Many trustees assume that SMSF loans don’t require ongoing attention. After all:
· Equity generally can’t be accessed
· Loan features often appear limited
But an LRBA is far from a “set and forget” arrangement.
Regular reviews of interest costs, loan structures and overall fund cashflow are essential. A broker-led review can uncover opportunities to:
· Reduce interest expenses
· Improve the fund’s liquidity
· Strengthen diversification
This helps trustees avoid the common trap of becoming “asset rich but liquidity poor” at retirement.
How Specialist Lenders Help Navigate Complex SMSF Scenarios
SMSFs involve many moving parts — trustees, advisers, accountants and lenders all interacting within a tightly regulated framework. Specialist lenders understand these complexities and the unique compliance requirements surrounding LRBAs.
They support everything from:
· Straightforward SMSF property purchases, to
· Intricate family group restructures involving multiple entities
With the right lender and broker, even the “non-standard” can be made straightforward.
But What If a Client Has Non-Standard Income or an Unusual Trustee Structure?
This is where specialist lenders and experienced brokers become invaluable. Non-bank lenders are often better equipped to handle:
· Complex cashflows
· Multiple-company or trust structures
· Non-standard employment income
· Tailored investment goals
For advisers navigating these scenarios, working with a broker who understands the nuances of non-bank lending can unlock solutions that mainstream banks simply can’t offer.
Why Brokers Are Essential Partners for Advisers
Mortgage brokers take on the heavy lifting across:
· Lender selection
· Documentation management
· Negotiating terms
· Structuring and compliance support
This frees advisers to stay focused on what they do best: shaping long-term strategy, protecting compliance, and supporting members’ retirement outcomes.
Together, advisers and brokers create a seamless, high-value experience for trustees.
The Risks When Advisers Manage SMSF Lending Alone
The SMSF lending landscape has changed dramatically over the past decade. Banks have largely stepped back, and non-bank lenders now dominate the space — each with different policies, features and restrictions.
Advisers who attempt to manage SMSF borrowing without broker support often encounter challenges such as:
1. Misunderstanding Loan Features
Some lenders offer redraw or offset sub-accounts. While these seem appealing, incorrect use under LRBA rules can lead to ATO compliance breaches.
2. Focusing Only on the Headline Interest Rate
Interest rates matter — but not as much as the overall impact on cashflow, liquidity and fund strategy.
3. Crossing Licensing Boundaries
· Brokers cannot give financial advice
· Advisers/accountants cannot give credit advice
This makes collaboration not just helpful — but essential.
Why Advisers Should Partner With Brokers Skilled in Non-Bank Lending
Non-bank lenders, including groups like Bluestone, offer flexibility that traditional lenders often cannot. Brokers experienced in this space can open up tailored pathways for trustees with:
· Complex structures
· Non-standard income
· Unique or ambitious investment goals
For advisers, partnering with the right broker means delivering more robust, more compliant and more strategic outcomes for clients.
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Credits
Sundaram Shanmugam, Smart SMSF Team
