SMSF Loan Refinancing: When and How to Refinance Your Super Fund Property Loan

February 9, 2026

If your self-managed super fund currently holds property with an existing loan, you might wonder whether refinancing could improve your position. SMSF loan refinancing involves replacing your current SMSF loan with a new loan, potentially from a different lender, to access better rates, improved loan features, or more suitable loan structures.

Understanding when refinancing makes sense and how the process works helps you make informed decisions about your fund’s property debt.

What is SMSF Loan Refinancing?

SMSF loan refinancing means paying out your existing SMSF property loan by taking out a new loan, typically with better terms or from a different lender. The property remains within your SMSF structure throughout the process—you’re simply changing the debt arrangement, not the ownership.

Like your original SMSF loan, the refinanced loan must operate under a Limited Recourse Borrowing Arrangement (LRBA) with the property held in a bare trust until the debt is fully repaid.

Common Reasons to Consider SMSF Loan Refinancing

Interest Rate Reduction: The most common driver for refinancing is accessing lower interest rates. Even a 0.5-1% reduction can generate meaningful savings over the remaining loan term.

Changed Circumstances: Your SMSF’s financial position may have strengthened since the original loan, potentially qualifying you for better rates or higher LVR if you want to access equity.

Better Loan Features: Your current loan might lack offset accounts, redraw facilities, or flexible repayment options that newer loan products offer.

Improved Serviceability: If your fund balance has grown or rental income has increased, you might qualify for more favourable lending terms.

Consolidation: If your SMSF holds multiple properties with different loans, consolidating into one facility might simplify administration.

Fixed Rate Expiry: When fixed-rate periods end, the revert rate might be uncompetitive compared to current market offerings.

Lender Service Issues: Poor lender communication, slow processing, or restrictive policies might prompt you to seek a lender with better service standards.

Accessing Equity: You might refinance to release equity for additional property purchases, renovations, or other complying investments (within LRBA rules).

When SMSF Loan Refinancing Makes Sense

Not every situation warrants refinancing. Consider these scenarios where refinancing might benefit your fund:

Significant Rate Differential: If you can reduce your rate by 0.5% or more, the potential savings likely outweigh refinancing costs. For example, on a $500,000 loan, a 0.75% rate reduction saves approximately $3,750 annually.

Long Remaining Loan Term: Refinancing makes more sense with 10+ years remaining on your loan. With only 2-3 years left, costs might exceed benefits.

Minimal Break Costs: If you’re on a variable rate or your fixed term has ended, you’ll avoid costly break fees that can negate refinancing benefits.

Improved Equity Position: If property values have increased or you’ve paid down principal, improved equity might unlock better lending terms.

Portfolio Expansion Plans: If you’re planning additional property purchases, refinancing to establish relationship with a lender offering better terms for future lending might be strategic.

When Refinancing Might Not Be Worthwhile

Several scenarios suggest staying with your current loan:

High Break Costs: Fixed-rate loans often carry substantial break costs if you exit early. Calculate whether rate savings exceed these costs over your intended holding period.

Short Remaining Term: With less than 3 years remaining, upfront costs often exceed any rate savings.

Marginal Rate Improvements: If the rate difference is only 0.1-0.2%, costs and effort might not be justified.

Recent Refinance: If you refinanced within the past 1-2 years, doing so again is rarely beneficial unless circumstances have dramatically changed.

Property Value Decline: If your property value has decreased, you might not qualify for refinancing or may face higher rates due to increased LVR.

Changed SMSF Circumstances: If your fund’s financial position has weakened, you might not qualify for better terms anyway.

The SMSF Loan Refinancing Process

Understanding the refinancing timeline helps set expectations:

Assessment and Comparison (1-2 weeks): Review your current loan terms, identify potential rate savings, and compare offerings from various lenders. An SMSF loan broker can assess multiple lenders simultaneously to identify suitable options.

Break Cost Calculation (immediate): If you have a fixed-rate loan, request a break cost estimate from your current lender. This figure is critical for determining whether refinancing is financially viable.

Application Preparation (1-2 weeks): Gather updated SMSF financial statements, property valuations, rental statements, and fund documentation required by the new lender.

Formal Application (2-4 weeks): Submit your application to the new lender. They’ll assess your SMSF’s serviceability, review the property, and determine whether they’ll approve the refinance.

Property Valuation (1-2 weeks): The new lender requires a current property valuation, which you’ll typically pay for ($300-$800 for residential, $1,500-$5,000 for commercial).

Legal Documentation (1-2 weeks): Your solicitor reviews the new loan documents and manages the discharge of your existing mortgage and registration of the new mortgage.

Settlement (2-4 weeks from approval): Once approved, the new lender pays out your existing loan and registers their mortgage against the property (held in the bare trust).

The entire process typically takes 6-10 weeks from initial assessment to settlement, though this varies based on lender processing times and documentation complexity.

Costs Associated with SMSF Loan Refinancing

Refinancing involves various costs that must be weighed against potential savings:

Discharge Fee: Your current lender typically charges $300-$500 to discharge the existing mortgage.

Break Costs: For fixed-rate loans, break costs can range from zero to tens of thousands of dollars depending on rate movements and remaining fixed term.

Application Fees: New lender establishment or application fees typically range from $500-$1,500.

Valuation Costs: Required by the new lender ($300-$800 for residential, $1,500-$5,000 for commercial properties).

Legal Fees: Solicitor costs for reviewing new loan documents and managing the discharge/registration process ($800-$2,000).

Government Charges: Mortgage registration fees vary by state (typically $150-$300).

SMSF Administration: Your SMSF administrator might charge fees to update fund records and prepare required documentation ($300-$800).

Total refinancing costs typically range from $2,500-$5,000 for straightforward residential SMSF loans, potentially more for commercial properties or complex situations.

Break Costs: The Critical Calculation

For fixed-rate SMSF loans, break costs deserve special attention. These costs compensate your lender for the economic loss of breaking your fixed-rate contract early.

Break costs depend on:

How much time remains in your fixed term
The difference between your fixed rate and current market rates
The outstanding loan balance

Example Scenario: You have a $400,000 SMSF loan fixed at 5.5% with 3 years remaining. Current fixed rates are 4.5%. You might face break costs of $10,000-$15,000 because rates have fallen and the lender must re-lend at lower rates.

Conversely, if rates have risen since you fixed, break costs might be minimal or zero.

Always request a formal break cost estimate from your current lender before proceeding with refinancing applications.

Calculating Your Potential Savings

To determine whether refinancing makes financial sense, calculate:

Annual Interest Saving: (Current loan balance × current rate) – (Current loan balance × new rate) = Annual saving

Total Refinancing Costs: Discharge fee + break costs + application fees + valuation + legal + government charges

Break-Even Period: Total costs ÷ Annual saving = Years to break even

Example:

Loan balance: $500,000
Current rate: 6.5% (annual interest: $32,500)
New rate: 5.75% (annual interest: $28,750)
Annual saving: $3,750
Total costs: $4,000
Break-even: 4,000 ÷ 3,750 = 1.1 years

In this example, you break even after approximately 13 months, and every year thereafter you save $3,750. If you plan to hold the property for 5+ more years, refinancing makes sense.

SMSF-Specific Refinancing Considerations

Refinancing SMSF loans involves unique considerations beyond standard property refinancing:

Bare Trust Continuity: The property remains in the existing bare trust—you’re not creating a new bare trust. However, the trustee of the bare trust changes from the old lender (or their nominee) to the new lender.

LRBA Compliance: The refinanced loan must still comply with LRBA rules—single acquirable asset, limited recourse structure, and arm’s length terms.

Trustee Guarantees: All SMSF trustees must provide personal guarantees to the new lender, just as they did for the original loan.

Investment Strategy Review: Your SMSF’s investment strategy should be reviewed to ensure refinancing aligns with the fund’s documented investment approach.

Related-Party Transactions: If refinancing involves releasing equity for other investments, ensure any related-party dealings remain compliant with superannuation law.

Fund Liquidity: Your SMSF must have sufficient cash to cover refinancing costs without causing liquidity problems for ongoing fund operations.

Lender Considerations in SMSF Refinancing

The SMSF lending market has unique characteristics:

Smaller Lender Panel: Fewer lenders offer SMSF loans compared to standard mortgages. Your refinancing options might be limited to 10-15 lenders rather than 30+ for standard loans.

Varying Criteria: Each lender has different SMSF lending policies around LVR limits, minimum fund balances, property types, and serviceability calculations.

Rate Competition: Because fewer lenders participate, rate competition might be less intense than for standard mortgages, though competitive options still exist.

Lender Appetite Changes: Some lenders periodically exit or re-enter the SMSF lending space, or adjust their appetite based on economic conditions.

Relationship Value: Establishing relationship with lenders offering both SMSF and standard lending products might benefit if you have financing needs outside your super as well.

Residential vs Commercial SMSF Loan Refinancing

The refinancing considerations differ between property types:

Residential SMSF Refinancing:

More lenders participate, providing better choice
Valuations are straightforward and relatively inexpensive
Processing times are generally faster
Rate differentials are often more competitive

Commercial SMSF Refinancing:

Fewer lenders participate in commercial SMSF lending
Valuations are more complex and expensive
Processing takes longer due to additional complexity
Lease documentation may need updating or review
Rate improvements might be less dramatic than residential

For commercial properties, the cost-benefit analysis requires particular care given higher refinancing costs and potentially smaller rate differentials.

Fixed vs Variable Rate Decisions When Refinancing

Refinancing presents an opportunity to reconsider your interest rate structure:

Variable Rate Benefits:

Flexibility to refinance again without break costs
Access to offset and redraw facilities
Benefit from rate decreases automatically
No lock-in period restrictions

Fixed Rate Benefits:

Certainty for budgeting and cash flow planning
Protection from rate increases
Potentially lower rates during promotional periods
Predictable SMSF expenses

Split Loans: Some borrowers refinance into split loans (part fixed, part variable) to balance certainty with flexibility. For example, fixing 50-70% provides rate certainty whilst maintaining flexibility on the variable portion.

Your decision should consider interest rate outlook, your SMSF’s cash flow stability, and how long you plan to hold the property.

Serviceability in SMSF Loan Refinancing

New lenders assess your SMSF’s capacity to service the refinanced loan using current criteria:

Rental Income: Assessed conservatively, typically at 70-80% of market rent to buffer for vacancies.

Fund Contributions: Ongoing member contributions may be considered, demonstrating the fund’s ongoing cash flow.

Existing Fund Assets: Cash reserves and other liquid investments within the fund support serviceability.

Property Expenses: Lenders factor in rates, insurance, maintenance, and potential property management costs.

Interest Coverage: Most lenders want rental income and contributions covering at least 1.2-1.5 times the loan interest.

If your SMSF’s circumstances have improved since the original loan—higher fund balance, increased rental income, or additional members making contributions—you’re well-positioned for refinancing.

Equity Release Through SMSF Refinancing

Some SMSF trustees refinance to access equity for additional investments:

Purchasing Additional Property: If your existing property has increased in value and you’ve paid down debt, refinancing at a higher loan amount (within LVR limits) might provide funds for a second property purchase.

Renovations or Improvements: Equity might fund property improvements that increase rental yield, though LRBA rules around single acquirable assets require careful structuring.

Portfolio Rebalancing: Some funds use released equity to diversify into other asset classes, though cash extracted from the property loan must be used for complying investments.

Important: Any equity release must maintain compliance with LRBA rules. The refinanced loan still relates to the single property held in the bare trust—you cannot use SMSF property equity for non-complying purposes or personal use.

Documentation Required for SMSF Refinancing

Lenders require comprehensive documentation to assess refinance applications:

SMSF Documents:

Trust deed
Current investment strategy
Last 2-3 years of financial statements and tax returns
Bank statements showing fund cash flow
Member contribution history

Property Documents:

Rental statements or lease agreements
Recent rates notices
Insurance policies
Strata records (if applicable)

Personal Documents:

Identification for all trustees
Personal financial statements
Credit reports and consent

Current Loan Documents:

Current loan statement showing balance and payments
Copy of existing loan contract
Break cost estimate (if fixed)

Having documentation prepared accelerates the application process.

Common SMSF Refinancing Mistakes to Avoid

Focusing Only on Rate: The lowest rate isn’t always the best deal if the loan lacks features you need or the lender has poor service standards.

Ignoring Break Costs: Fixating on rate savings without properly calculating break costs leads to decisions that cost more than they save.

Refinancing Too Frequently: “Rate-chasing” every 6-12 months racks up costs without meaningful benefit. Refinancing every 3-5 years typically makes more sense.

Inadequate Cost Analysis: Failing to account for all refinancing costs—particularly for commercial properties—can make apparently attractive refinancing unviable.

Neglecting Loan Features: Focusing purely on rate while ignoring offset facilities, redraw options, or repayment flexibility might cost you more flexibility than you save in interest.

Poor Timing: Refinancing just before transitioning to pension phase or planning to sell the property means you don’t capture the full benefit of rate savings.

Forgetting Professional Advice: Not consulting your accountant about potential tax or compliance implications, or not engaging an experienced SMSF loan broker, can lead to suboptimal outcomes.

Tax and Compliance Considerations

Whilst we provide credit assistance rather than tax advice, refinancing can have implications you should discuss with your accountant:

Interest Deductibility: Refinancing costs and ongoing interest remain deductible within the SMSF, subject to specific rules.

Compliance with LRBA Rules: The refinanced loan must maintain compliance with Limited Recourse Borrowing Arrangement requirements.

Investment Strategy Alignment: Refinancing should align with your fund’s documented investment strategy. If refinancing to release equity for new investments, ensure your investment strategy supports this.

ATO Scrutiny: The ATO monitors SMSF property transactions. Ensure refinancing is genuine commercial decision-making rather than contrived arrangements.

Fund Administration: Your SMSF administrator needs to update fund records, including updating the bare trust documentation if the custodian trustee changes.

For tax implications specific to your situation, consult with a qualified accountant who specialises in SMSF compliance.

Market Conditions and Timing Your Refinance

Several factors influence optimal refinancing timing:

Interest Rate Environment: Rising rate environments create urgency to lock in fixed rates. Falling rate environments favour waiting or refinancing to variable rates.

Property Market Conditions: Strong property markets improve your equity position, potentially qualifying you for better terms.

Lender Competition: Periods of strong lender competition for SMSF business create opportunities for better deals.

Economic Outlook: Economic uncertainty sometimes causes lenders to tighten SMSF lending criteria, whilst stable periods see more competitive offerings.

Personal Circumstances: Changes in your employment, business success, or other circumstances affecting serviceability should be factored into timing.

There’s no perfect time to refinance, but understanding market conditions helps you assess whether current conditions favour or disfavour refinancing.

Questions to Ask Before Refinancing Your SMSF Loan

Consider these questions before committing to refinancing:

What’s my total refinancing cost including break fees?
How long until I break even on these costs?
How long do I plan to hold this property?
Has my SMSF’s financial position strengthened or weakened since the original loan?
Do I need features my current loan doesn’t offer?
Are there better loan products available now than when I originally borrowed?
Have I obtained current break cost estimates from my existing lender?
Does refinancing align with my fund’s investment strategy?
What happens if property values decline or rental income decreases?
Have I discussed the tax and compliance implications with my accountant?

How an SMSF Loan Broker Can Help

Refinancing SMSF loans involves navigating a specialist lending market with fewer participants and more complex requirements than standard mortgages. Working with an experienced SMSF loan broker offers several advantages:

Market Knowledge: An SMSF loan broker understands which lenders actively participate in SMSF refinancing, their specific criteria, and current rate offerings across the panel.

Cost-Benefit Analysis: We help you calculate whether refinancing delivers genuine benefit after accounting for all costs, particularly break fees for fixed-rate loans.

Application Strategy: We structure applications to maximise approval likelihood and secure optimal terms based on your SMSF’s circumstances.

Time Efficiency: Rather than approaching multiple lenders individually, we compare options across our lending panel simultaneously, saving you weeks of research and applications.

Negotiation: Established relationships with SMSF lenders sometimes create opportunities for rate negotiation or fee waivers not available to direct applicants.

Compliance Insight: We understand LRBA requirements and can flag potential compliance issues before they derail your refinancing.

Coordination: We liaise with lenders, your accountant, and solicitor to keep the refinancing process moving efficiently.

Working with Settled With Joe

At Settled With Joe, we specialise in SMSF lending across residential, commercial, and investment properties. Our experience in the SMSF loan market means we understand the nuances that make refinancing successful.

When you work with us on SMSF loan refinancing, we:

Conduct Comprehensive Analysis: We review your current loan, calculate potential savings, assess break costs, and determine whether refinancing genuinely benefits your fund.

Compare Multiple Lenders: Our relationships with lenders active in SMSF refinancing means we can compare rates, features, and policies across the market to identify suitable options.

Manage the Process: From initial assessment through to settlement, we handle the application, coordinate with your professionals, and keep you informed at every stage.

Explain Your Options Clearly: We break down complex lending terms into clear language, helping you understand the trade-offs between different loan structures and rate options.

Consider Your Full Picture: We look beyond just interest rates to consider loan features, lender service standards, and how the refinanced loan fits within your fund’s broader strategy.

Maintain Compliance Focus: We ensure refinancing structures maintain compliance with LRBA requirements and flag when you should seek advice from your accountant or financial adviser.

Whether you’re looking to reduce your rate, access better loan features, release equity for additional investments, or simply explore whether refinancing might suit your SMSF, we’re here to help you navigate the options.

Let’s discuss your current SMSF loan and assess whether refinancing could improve your fund’s position. As your SMSF loan broker, we’ll provide you with a clear analysis of costs versus benefits, helping you make an informed decision about your fund’s property debt.

Disclaimer: This article provides general information only and does not constitute financial, investment, tax, or superannuation advice. The information is current as of February 2026 but lending policies, interest rates, and market conditions change regularly. Refinancing decisions should be made after careful analysis of your specific circumstances and in consultation with qualified professionals. We strongly recommend discussing tax and compliance implications with accountants specialising in SMSF before proceeding with refinancing. Settled With Joe is a Credit Representative of Yellow Brick Road, Australian Credit Licence [number]. Our expertise is in credit assistance—we do not provide financial, investment, or tax advice. For personalised guidance on SMSF loan refinancing, contact us to discuss your lending needs.