How SMSF lending has changed and what investors need to know

15 JUL 2025 By Finni 3 min read Finance

SMSF lending is now more flexible, with higher LVRs, fewer barriers to entry, and smarter strategies. Here’s how to make it work for your investment portfolio.

Self-Managed Super Funds (SMSFs) have long held appeal for strategic property investors. But in recent years, a mix of outdated beliefs and shifting lending policies has muddied the waters. Many assume SMSF loans are too complex, too restrictive, or only suitable for older investors. In reality, SMSF lending is undergoing a quiet revolution and it’s creating powerful new pathways for growth.

The belief that SMSF investors need $200K or more in super is increasingly inaccurate. While a solid balance helps, some lenders are open to lower amounts, especially when property selection and expected rental yield are strong. This means more investors can enter the market sooner than they might have thought possible.

LVR assumptions have also changed. It was once standard to cap SMSF borrowing at 70%, but today, some lenders are offering up to 90% LVR opening the door for more leveraged growth and reducing the amount of capital needed upfront.

Another shift? The idea that SMSF property loans are just for those nearing retirement. In fact, more younger investors and self-employed professionals are using SMSFs to invest in both residential and commercial real estate. Many are purchasing their own business premises through their SMSF, turning rent payments into wealth-building investments.

Liquidity requirements are also evolving. The once-standard 5-10% liquidity buffer is no longer a blanket rule. Lenders are more flexible if the fund has steady contributions, such as from a self-employed member or rent from an existing property. Likewise, rules about contribution history have softened. Where two years of contributions were once required, lenders are increasingly considering newer SMSFs with strong structures and income forecasts.

Despite the improvements, SMSFs still require extra attention. Setup costs, fund administration, audits, and reporting remain more complex than a standard home loan. And yes, the fund must be set up before applying for finance, a step that can be risky without expert guidance.

So, what are the wins? First, SMSF borrowers are now seeing more competitive rates and loan features. As more lenders compete in the space, pricing has improved. Second, increased flexibility around contributions and LVRs means investors can grow their portfolios faster, often with less upfront capital. Third, commercial property SMSFs are far more accessible, and owning your own business premises through super is now a smart, viable option.

For investors looking to build wealth through property, SMSFs are no longer just a niche strategy. They’re a powerful tool when used right.

Thinking about SMSF finance? Book a call with a Finni broker who specialises in SMSF lending and get clarity on how to structure your investment for long-term success.