Debt investment in Australia

Am I eligible to invest in mortgages?

Am I eligible to invest in mortgages?

Are you looking for ways to diversify your investment portfolio?

Mortgage investments can be a great addition for experienced investors, by creating opportunities to introduce steady and stable income.

Subject to meeting ASIC Wholesale/Sophisticated Investor requirements, mortgage investing is becoming more widely available to many more investors.

This type of investing lends itself to Retirees as well as non-Retirees looking for regular income.

In this blog, we will examine the requirements as well as the benefits of mortgage investment.


What is an investment mortgage?

Before we uncover the exact parameters on who is eligible to invest in mortgages, let us first answer the question of what mortgage investment actually is.

Investing in mortgages, also known as private lending or debt investment, is when individual investors invest their own funds into a mortgage, via a managed fund.

A first mortgage investor refers to an investor who has loaned money on a mortgage that is secured and registered first on the Certificate of Title.

Registered First mortgage investments typically carry less risk than a second mortgage, as they are registered on title first and therefore are first in line in the event of a default.

A second mortgage investment refers to a mortgage that is registered behind the first mortgage, and subsequently receives second priority in the event of a default.

While a second mortgagee may receive a greater return, they do require more risk tolerance and can be more susceptible to variables.

For example, in the event of a default, if the property the borrowers provided as security for the mortgage is sold for less than the total amount owed, the second mortgage investors (who are second in line behind the first mortgage), may risk part or all their investment or some or all of any outstanding interest owed.

Our well-experienced team offers decades of combined experience, ensuring that any second mortgages approved through our fund are securely registered, and with minimal risk of default.

In the unlikely event a second mortgage does enter default, our default process ensures timely remediation should it be required.

Sophisticated investor in Australia

Who invests in mortgage loans?

As defined by the Corporations Act (Cth) 2001, investing in mortgages is suitable for sophisticated investors (defined in chapter 6D) and wholesale investors (defined in chapter 7.9) so you can know precisely if you are eligible or what you need to do to satisfy these requirements.

Sophisticated investor

A sophisticated investor in Australia according to the Corporations Act (Cth) 2001, Chapter 6D must meet at least one of the following criteria:

  • The minimum amount contributed is at least $500,000
  • An accountant provides a Certification that the net asset worth of the individual(s) is $2,500,000; or
  • a gross income for each of the last two financial years of at least $250,000 per annum
  • Is a ‘Professional Investor’ as defined in section 9 of the Corporations Act

Wholesale investor

A wholesale investor or wholesale client has these same qualities above, with a few notable differences, which are:

  • An additional eligibility option stating that if the loan is given out for the purpose of a large business – not small – then you are considered a wholesale client
  • This definition is more stringent, in that the “satisfaction” of the mortgage fund or accountant that you “know what you’re doing” doesn’t suffice as being a wholesale client, you are required to evidence your experience
  • Therefore, being a “professional investor” as defined in section 9 of the Corporations Act also doesn’t necessarily mean you qualify as a wholesale client


Why do people invest in mortgages?

Some of the reasons why people invest include:

  • An addition to their portfolio of financial investments
  • To provide stable income via a secured investment
  • To access the real estate market indirectly via a secured mortgage

Are mortgages good investments?

Looking past your eligibility, if you are unsure if investing in mortgages is the right decision for you, it’s important to understand the benefits and risks of mortgage investing.

Not only do mortgage funds provide some of the best mutual funds for monthly income, but they offer some of these other benefits:

  • Yield high returns
  • Reliable, steady and consistent stream of income
  • You have access to a Team who support and guide you through the investment process
  • Your choice of mortgage investment opportunity/ies
  • Variety of interest rates
  • The flexibility of choosing to invest in only a portion of the loan or to fund the whole opportunity


Where can I invest in a mortgage?

Mortgage funds like Arthurmac act as the intermediary between you and the borrowers

Think you may be eligible for mortgage investments? Want to learn more?

Arthurmac works with investors across the country to achieve their financial goals.

So if you are an investor wanting to inflate some of your capital, or if you are not quite ready but are keen to learn more about the best interest rates on investments then contact Arthurmac today.

Alternatively, if you are looking to raise funds, especially for property related to business or commercial purposes, we invite you to speak with us today to learn how you can benefit from these sophisticated and wholesale investors through our mortgage fund.

Arthurmac offers non-conforming and low doc loans, meaning we provide solutions to borrowers who may not meet eligibility for conventional bank loans.

Contact us today on 1300 125 556 or if you’re a borrower, you can fill out your loan information through this form and we will get back to you soon.

Stuart Styles

Managing Director Stuart has 16 years of experience as a Financial Services professional having worked previously in asset finance & management roles within the Motor Industry.