If your SMSF has a property loan, its interest rate is one of the biggest costs in your fund. It comes straight out of the rent and contributions that should be building your retirement. It’s also one of the few costs you can actually do something about.
Here’s what sets an SMSF loan rate, why it’s usually higher than a standard investment loan, and how to tell whether your fund is paying more than it needs to.
Why are SMSF loan rates higher than normal home loans?
SMSF property loans are made under a limited recourse borrowing arrangement (LRBA). If the loan goes bad, the lender can only claim the property that secures it, not the other assets in your fund.
That extra risk for the lender, plus the extra paperwork (a separate holding trust and more legal work), is why SMSF loans usually cost more than a standard investor loan.
Fewer lenders offer SMSF loans, too, so there’s less competition on price.
What decides the rate on your SMSF loan?
- Residential or commercial property - Lenders price these differently. Commercial loans often depend more on the lease and the tenant.
- How much you borrow against the property - A lower loan-to-value ratio (LVR) usually means a lower rate. Most SMSF lenders cap borrowing well below what they'd lend on a normal home loan.
- The lender - Banks and non-bank lenders price SMSF loans very differently. Non-banks can be more flexible on policy and sometimes on rate.
- Your fund's strength - Lenders look at the fund's total balance, how much cash it holds, and whether contributions and rent comfortably cover the repayments.
- Fixed or variable - Fixing gives certainty but can cost more and limits extra repayments.
- Fees - Set-up, valuation, legal and ongoing fees can matter as much as the headline rate. Always compare the comparison rate, not just the advertised one.
Has the 2026 change affected SMSF home loan rates?
Yes, in an important way. From 10 August 2026, SMSFs can no longer take out a new loan to buy residential property. Loans already in place are grandfathered, and they can still be refinanced.
So if you’re searching for “SMSF home loan rates” today, it’s almost certainly because you already have one.
The question is no longer which lender to buy with. It’s whether your current loan is still the right one. Commercial property, meaning business real property, can still be bought with an SMSF loan.
How do I know if my SMSF is paying too much?
A few signs it’s worth a look:
- You haven't reviewed the loan since you took it out.
- You're on a lender's standard rate rather than a discounted one.
- Your property has gone up in value, so the loan is now a smaller share of what it's worth.
- Your fund's balance and cash position are much stronger than when you borrowed.
- Repayments are squeezing the fund's cash flow.
Even a small rate difference adds up over the life of a large loan. That’s money that stays in your fund.
How can I get a lower SMSF loan rate?
Start by asking your current lender. Some will reprice a loan for an existing customer. If that doesn’t work, a broker who works with SMSF lenders can compare the market for you, including lenders you may not deal with directly.
Before you switch, check the whole picture: break costs on a fixed loan, exit and set-up fees, and whether the new loan suits your fund’s investment strategy and cash flow.
A refinance also needs to fit the post-August 2026 rules (see [Can I still refinance my SMSF loan?]).
Why talk to RK about your SMSF loan?
Most trustees hear from a lender or an accountant, rarely both. At Rogerson Kenny, our SMSF accountants and our finance team work side by side. We look at the loan and the fund together: the rate, the cash flow, and whether it still fits your strategy.
Not sure what your SMSF is paying? Book a free 20-minute chat with our team. Bring your current rate and loan details, and we’ll tell you whether it’s worth looking further.
Still got questions?
call us on (03) 9802 2533
Email us: info@rogersonkenny.com.au to talk through your options.
*Disclaimer: This article is general information only and does not take into account your personal circumstances. Always seek professional advice before making financial decisions.*
General information only. It doesn’t take your personal circumstances into account. Rogerson Kenny Finance Pty Ltd ACN 672924382 is authorised under LMG Broker Services Pty Ltd Australian Credit Licence 517192.
