The Eclipse LRBA

Limited Recource Borrowing Arrangement (LRBA)

Eclipse Super offers a unique SMSF Gearing (LRBA) Structure that gives people the ability to use their Superannuation savings and a loan to purchase property.  The Eclipse LRBA is a flexible structure that has been used with a wide range of lenders for both Residential & Commercial Properties.

To comply with the legislation governing superannuation borrowings the property being purchased must sit in a separate trust until the loan is repaid.  This is often referred to as a Bare Trust or Custodian Trust.  At all times your SMSF is the sole beneficiary of that trust.

The unique element to the Eclipse LRBA is that it allows the Corporate Trustee of the Bare/Custodian Trust to be the borrower as an alternative to the Superannuation Fund Trustee.  This allows access to a wide range of standard lending products at much lower rates and better terms than the restrictive "Superannuation Lending Products".

Some of the potential benefits of using the Eclipse structure include:-

  • You can access standard loans.  You do not have to use overpriced "Superannuation" Products.
  • Ability to borrow up to 80% of the property value
  • No minimum fund balance requirements
  • No prescribed Liquidity requirements embedded in the loan product
  • No contribution history required
  • Access to Lo Doc Lending options
  • Residential rates starting from under 4% p.a.
  • There is potential to pay 0% capital gains tax when you sell the property
  • Tax deductible super contributions can be used to make loan repayments

Remember, all purchase costs (deposit, stamp duty, fees & charges) can be paid by the SMSF as the beneficial owner of the property being purchased.

Note: There are investment risks and compliance obligations associated with any type of SMSF investments.  Eclipse strongly recommends that all Trustees seek independent financial planning advice when using an LRBA.