The investment landscape is complex. Knowing which asset class to invest in at any one time and what works well for risk-conscious investors is half the battle. An increasingly appealing option in the market is first mortgage investments, which has experienced strong growth as investors opt for an asset class offering strong risk-adjusted returns amid a flatter economy.
A first mortgage fund is a type of investment product that focuses on mortgage-backed securities. Investors effectively become lenders to borrowers looking to purchase and develop property. This arrangement allows investors to lend capital directly to borrowers, who in turn offer a first registered mortgage over a property or asset as collateral. This type of of lending takes borrowers outside the major banking institutions where they can access capital not currently being made available by the major banks.
Repaid first
A first mortgage fund is an investment opportunity may work well for investors wanting to avoid the instability of a stock exchange while also adding greater diversification to their portfolio.
First mortgage funds are considered alower risk model because a first registered mortgage investment is repaid ahead of any other claims on the property. Diversifying into a mortgage fund means investors can invest in multiple properties, further reducing risk.
Investing in commercial property
Investing in a first mortgage fund in the commercial property sector can be an effective way to manage risk, with plenty of different properties and projects to choose from according to an investor’s risk appetite.
First mortgage investments in the commercial space tend to provide higher returns compared to other types of fixed-income investments in the market, such as term deposits or high-interest savings accounts.
Key facts
Interest rates: Typically interest payments are made monthly in arrears.
Maximum return: Generally, the maximum term of a loan facility is between 1 and 3 years.
Borrowing capacity: RMBL has a maximum Loan to Value Ratio (LVR) of 66.66% of the sworn valuation of the property. Lower LVRs will apply for certain categories of property.
Repayments: Repayment and/or reduction options are available for Borrowers.
Funds for construction projects: When borrowing for a development project, RMBL will lend on a cost to complete basis where appropriate. There may also be a requirement for pre-sales to be in place.
Loan facility renewal: Renewal options are available where all obligations have been met during the period of the initial loan facility and the value of the security property continues to satisfy RMBL’s LVR requirements.
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You should first read and consider the TMD, the Product Disclosure Statement (PDS) dated 1 February 2023 and the Supplementary Product Disclosure Statement dated 1 March 2024 (SPDS), and the specific Loan Supplementary Product Disclosure Statement relating to any loan(s) you wish to invest in. We encourage you to seek your own independent advice before making a decision to invest with RMBL Investments Limited.
If you have any questions, please contact our Investment Team at team@rmbl.com.au.
