SMSF Lending FAQs

We would love to be able to help you with this. There are certain conditions depending on when your arrangement started. Please email or call me to discuss your situation in more detail.

LRBA stands for limited recourse borrowing arrangement. It is an arrangement which allows a self-managed super fund (SMSF) to borrow money to purchase assets such as real estate or shares. The loan must be secured against a single asset purchased with borrowed funds—not the entire portfolio of assets held by the SMSF. This means if the asset fails to generate returns or its value falls, then only the asset can be used to repay the loan, not other assets held by the super fund.  It also means lenders can't take any other legal action against you if you fail to meet your repayment obligations (unless a personal guarantee is provided). The ATO provides detailed information on LRBAs.

A bare trust is an entity used by a self-managed super fund in order to acquire a bank loan, generally for the purpose of purchasing real estate. As the SIS Act does not allow for SMSFs to borrow money unless under a Limited Recourse Borrowing Arrangement (LRBA) with a bare trustee as the legal holder of the mortgage. See our limited recourse diagram to see how the bare trust, SMSF and LRBA are commonly structured.