How to refinance an SMSF loan

If you’re unsatisfied with your current SMSF loan, it may be time to consider refinancing. The SMSF loan refinancing process can be more complex and time-consuming than the standard loan, but it does offer a range of benefits. 

In this article, we provide a quick how-to guide on refinancing an SMSF loan:  

Meet eligibility criteria for SMSF refinance  

You will need to ensure you meet the eligibility criteria and that the loan is suitable for your fund’s investment needs. Here are some common eligibility requirements when refinancing an SMSF loan:  

• Some lenders require a 70% loan-to-value ratio. If the value of the SMSF property has changed, so could the refinance cost.  
• According to the Australian Taxation Office (ATO), refinancing an SMSF loan generally must not increase the amount you're borrowing against the property. Many lenders typically allow you to borrow up to 80% of the property's value, so the entire cost of refinancing should be lower than this.  
• Your SMSF property is a standard residential or commercial property. It should also meet lender requirements.  
• Lenders usually prefer at least 10% to 20% of the property value in liquid assets after settlement. The percentage varies from lender to lender.  
• The SMSF refinance loan term is typically between 15 and 30 years.  

Gather the necessary documents  

In addition to meeting the lending criteria, you will need to have a few supporting documents ready to supply with your application. This may include:  

• SMSF tax returns   
• Audited SMSF financial statements  
• SMSF trust deed  
• Custodian trust deed  
• Bank statements and/or audited financial statements  
• SMSF income tax and regulatory return  
• Financial reports  
• Income tax returns  
• Latest statement before establishing the SMSF  

It’s best to have these documents on hand before you proceed with your SMSF refinance application. Having them ready can make the whole refinance process go smoothly with less risk of potential delays. 

If you have more questions about the refinancing process, consider speaking to a loans.com.au lending specialist. Our talented team can help you with the process of refinancing an SMSF loan or answer any questions you might have about the process. You can get in touch by calling 13 10 90. 

Consider the costs of an SMSF refinance  

Just like refinancing a home loan, refinancing an SMSF loan costs money. Consider all the expenses before deciding whether refinancing ends up being more cost-effective than sticking it out in your current LRBA.  

Refinance fees include break costs and early payment fees on your current SMSF loan. Your property may need to be professionally valued, which would mean a valuation fee. There are government fees, as well, to be paid to the Land Titles Office. 

You should also consider the costs when you apply for an SMSF refinance, from the loan application fee to the ongoing fees. 

Find a good deal on your SMSF refinance  

Finding an SMSF refinance with lower rates and better loan features than your current loan is important.  It’s best to shop around to see what types of SMSF refinance deals are out there. This will give you a better idea of how much interest rates are and what kind of features are available. You’ll also see the common loan terms and conditions.  

Aside from interest rates and loan features, there are also SMSF refinance options designed for different borrowers. Check out the range of SMSF refinance loans to see which one suits your needs best.  

Apply for an SMSF refinance  

After you’ve weighed the costs of a refinance, made sure you’re eligible, gathered the needed documents, and found the ideal SMSF refinance loan, it’s time to submit your application. The whole SMSF refinance process differs depending on the lender.   

At loans.com.au, we offer an easy and streamlined application process. Because everything is online, you don’t have to worry about taking time out of your day to visit a branch or print out physical copies of your documents. All you need to do is apply online! 

Disclaimer: The information provided in this article is general in nature and does not constitute financial or legal advice. Please seek independent professional advice tailored to your personal circumstances before making any financial decisions.