The easiest way to refinance your SMSF loan

Refinancing an SMSF loan works differently to refinancing a standard home or investment loan, and the rules around limited recourse borrowing arrangements mean you cannot treat your super fund like a typical borrower.

The decision most trustees in Inglewood face right now is whether to refinance an existing LRBA before their fixed rate expires or their revert rate climbs, and whether the process will put their fund's compliance at risk. If your SMSF holds residential or commercial property and the loan terms are no longer working, refinancing is allowed under ATO rules, but only if the structure stays intact and the new loan meets the same borrowing restrictions as the original.

Can you refinance an existing LRBA without restructuring the fund?

You can refinance an SMSF loan without altering the underlying bare trust or changing the single acquirable asset held by the trust. The property remains in the same legal structure, the new lender replaces the old one, and the loan terms are updated. Stamp duty is generally avoided because legal title does not transfer during the refinance, just the mortgage.

Consider a trustee in Inglewood whose SMSF purchased a commercial property on Beaufort Street in 2021 using an LRBA with a fixed rate that expired mid-2026. The revert rate was 8.4%, and comparable SMSF refinance lenders were offering 6.9% variable. The trustee applied to switch lenders, the bare trust remained unchanged, and the new loan settled within four weeks. The SMSF now saves around $1,100 per month in repayments, and the fund's compliance position did not change because the asset, structure, and recourse limitations stayed the same.

LRBA compliance and the single acquirable asset rule

Every LRBA refinance must comply with section 67A of the Superannuation Industry (Supervision) Act, which requires that the loan is used to acquire a single acquirable asset and that the lender's recourse is limited to that asset alone. When you refinance, the new lender must accept the same recourse limitation. If the new loan attempts to secure other SMSF assets or bundle multiple properties under one facility, the arrangement breaches the LRBA rules and the fund can be penalised.

The bare trust that holds legal title to the property cannot be dissolved or replaced during refinance. If a lender requires a new trustee or a change to the trust deed, the refinance is likely to be treated as a new borrowing arrangement, not a refinance, and may trigger stamp duty and compliance issues.

Residential LRBA refinancing and the 23 June 2026 ban

Existing residential LRBAs entered into before 23 June 2026 are fully grandfathered, and that includes future refinancing. If your SMSF holds a residential property in Inglewood or nearby suburbs like Bedford or Yokine, you can still refinance that loan after the ban takes effect. The ATO has not yet clarified whether a refinance will be treated as a new LRBA under the legislation, so trustees should avoid restructuring the loan unnecessarily until formal guidance is released. Acting without clarity could put the fund's grandfathered status at risk.

Commercial property LRBAs are unaffected by the ban. If your fund holds a retail, office, or industrial asset in the Inglewood area or across Perth, refinancing remains available under current rules without additional restrictions.

What lenders look for in an SMSF refinance application

Lenders assess SMSF refinance applications based on the fund's rental income, the trustees' financial position, and post-settlement liquidity. Most lenders now require the fund to hold a cash buffer equivalent to 5-10% of the property value after settlement. This buffer covers unforeseen expenses like vacancies, repairs, or compliance costs, and demonstrates that the fund can meet its obligations without relying solely on rental income.

In a scenario where an Inglewood SMSF holds a residential property valued at $600,000, the lender may require the fund to retain at least $30,000 to $60,000 in cash or liquid assets after refinance settlement. If the fund cannot demonstrate that buffer, the application may be declined or approved at a higher interest rate.

Trustees must also complete certified SMSF training covering LRBAs, related-party transactions, and cash flow planning. This requirement applies to both new and existing trustees, and non-compliance can result in penalties of up to $19,800 or fund disqualification. When you apply to refinance an SMSF loan, most lenders will ask for proof of training completion as part of the application process.

Comparing variable and fixed rates for SMSF refinancing

SMSF loan interest rates sit above standard residential and investment loan rates because of the additional compliance risk and limited recourse structure. Variable rates for SMSF residential loans typically range from 6.5% to 7.5%, while commercial LRBA rates can vary depending on the property type, location, and loan-to-value ratio.

If your fixed rate is expiring and you are weighing up whether to refix or move to a variable rate, consider the fund's income stability and how long you intend to hold the property. A variable rate gives you flexibility to make extra repayments or refinance again without break costs, while a fixed rate locks in certainty but limits your ability to adjust the loan structure if circumstances change. Some lenders offer offset accounts on SMSF variable loans, which can reduce interest while keeping cash accessible for fund expenses.

Related-party LRBAs and the safe harbour interest rate

If your SMSF borrowed from a related party, such as a member or director, to acquire the property, the loan must comply with the ATO's safe harbour interest rate to avoid being treated as non-arm's length income. For the 2025-26 financial year, the safe harbour rate for real property LRBAs is 8.95%. If your related-party loan charges less than this rate, the ATO may deem the income from that asset as non-arm's length income, taxed at 47%.

When refinancing a related-party LRBA, you can either refinance with an external lender or adjust the related-party loan terms to meet the safe harbour rate. Most trustees in Inglewood refinancing from a related party choose an external lender to remove the compliance risk and access more competitive rates.

Settlement timeline and record-keeping requirements

SMSF refinance settlements typically take three to six weeks, depending on the lender's credit process and whether the fund's trust deed and compliance documents are current. Lenders require a copy of the bare trust deed, the original LRBA agreement, the fund's trust deed, recent financials, and proof of rental income. If any of these documents are outdated or incomplete, settlement can be delayed or the application declined.

The ATO has increased data-matching and transaction monitoring for SMSFs with borrowing arrangements, and funds must maintain rigorous records of all loan transactions, repayments, and compliance decisions. If you are working with a specialist SMSF refinance broker, they can coordinate with your accountant and conveyancer to make sure all documents are lodged correctly and settlement proceeds without compliance issues.

Call one of our team or book an appointment at a time that works for you to discuss your SMSF refinance options and confirm your fund's eligibility before your fixed rate expires or your revert rate increases further.

Frequently Asked Questions