Investing in a first mortgage investment can be a game-changer for savvy Investors looking to diversify their portfolios while securing stable, high-yield returns. Unlike more volatile investment options, first mortgage investments are a conservative option that have the unique advantage of offering high returns backed by tangible real estate assets, providing both security and peace of mind.
In this article, we’ll explore five compelling benefits of investing in first mortgage investment, highlighting how they can enhance your investment strategy. As a bonus, we'll reveal an additional advantage that could make all the difference in achieving your financial goals.
What is a First Mortgage Investment?
A first mortgage investment is simply a type of managed investment strategy where an Investor lends money to a Borrower who is seeking to finance a short-term loan. The loan may be to develop a set of townhouses, a child care centre, a land subdivision or even an office block. Whatever the loan is for, the Investor lends the money in order to gain access to stable, passive income from the interest on the loan. The loan and the subsequent investment are managed by a Mortgage Fund, i.e. Credit Connect Group.
In order to secure the loan, the Borrower must put an Australian property they own up as collateral. This collateral is called the "security". This ensures that, in the event of the Borrower defaulting on the loan, the Mortgage Fund can sell the security to recover the Investor funds.
During the loan period (6 - 24 months), the Borrower pays the principal and interest to the Mortgage Fund who distributes the interest to the Investor(s) on a monthly basis. At the end of the loan, the principal loan amount is returned to the Investor(s) who can then roll their funds into a new loan in order to continue to reap the benefits of further first mortgage investment opportunities.
Here are 5 benefits of investing in a First Mortgage Investment:
1. Receive Monthly Income:
A first mortgage investment with CCG offers sophisticated Investors monthly income through regular fixed monthly income distributions. These distributions provide a predictable and steady income-focused investment stream. This makes first mortgages an excellent option for Investors seeking consistent returns and capital preservation, such as retirees looking for a new income channel or those looking for a stable cash flow to supplement their current income.
2. Secured Investment:
First mortgage investments offer a high level of security for investors as every investment is secured by a registered first mortgage over Australian real estate. This means that Investors have a tangible, physical asset backing their investment. In the event of a borrower default, the property can be sold to recover the investment funds. This collateralisation makes first mortgage investments a secured form of investment.
3. Attractive Returns:
First mortgage investments offer the potential for attractive returns that are often higher than those available through traditional savings accounts or fixed-income securities. These returns are generated from the interest payments on loans secured by real estate, which typically provide a steady income stream. Because all investments are backed by a security property, there is a strong layer of security, while still delivering impressive yields.
For investors seeking a balance between risk and reward, first mortgage investments present a compelling opportunity to achieve consistent, high returns with the added peace of mind that comes from knowing their investment is secured by real Australian assets. At the time of writing this blog article, we offer 9-11% p.a. investor target returns paid monthly to our Investors.
You can speak to our Investment Team to find out how you can take advantage of these attractive returns.
4. Capital Preservation:
Capital preservation is a key advantage of first mortgage investments, as these investments are structured to safeguard the Investor's principal. First Mortgage Investments are secured by Australian real estate, meaning that the underlying asset provides a stable foundation for the investment. The focus on capital preservation makes First Mortgage Investments appealing to Investors who prioritize the security of their initial investment while seeking consistent, ongoing income.
5. Control and Transparency:
First mortgage investments offer investors significant control and transparency. One of the primary benefits of investing in a first mortgage with CCG is the clear visibility into where your funds are allocated. As a contributory fund, CCG allows investors to conduct their own due diligence in addition to the independent assessments conducted by our panel of expert valuers. This transparency and control enable investors to align their first mortgage investments with their specific financial goals and personal preferences, providing a tailored investment experience.
And one bonus benefit of first mortgage investments that simply cannot be ignored...
6. Portfolio Diversification:
Investing in a first mortgage offers a compelling way for Investors to diversify their portfolio. Real estate and mortgage investments often operate independently of the stock market, providing a buffer against volatility in other areas. By incorporating first mortgage investments into your investment portfolio, you can achieve a more stable overall investment performance through effective portfolio diversification.
In conclusion...
Investing in a First Mortgage offers Investors a compelling blend of secured income, attractive high returns, capital preservation, transparency and control. For Investors looking to expand their investment portfolio beyond traditional stocks and bonds, a First Mortgage Investment provides a secured, tangible and potentially lucrative investment option to diversify your investment portfolio.
To find out how you can take advantage of First Mortgage Investment opportunities, you can speak to our Investment Team or give us a call on 1300 795 507.