Investing in Australian real estate is a time-honored strategy for building wealth and, within the real estate investment landscape, first mortgage investment opportunities stand out for their unique benefits.  A first mortgage investment occurs when an investor lends money to a borrower, via a mortgage fund. The investment is secured by a first mortgage on a property, meaning the mortgage fund has the primary claim on the property if the borrower defaults and the investor needs to be paid for their contribution.  

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Here are five of the top benefits of investing in a First Mortgage Investment:

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1. Secure Investment

First mortgage investments offer a high level of security. Since the investment is secured against real Australian real estate, investors have a tangible asset backing their investment. In the event of a borrower default, the property is sold to recover the investment funds. This collateralisation makes first mortgage investments less risky compared to unsecured forms of investment.

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2. Attractive Returns

Investors in first mortgages can enjoy attractive returns. Interest rates on first mortgage loans are typically higher than those found in traditional savings accounts or bonds, reflecting a different risk profile in comparison to fully secured government instruments but still offering a relatively safe position against the volatility of stocks or the uncertainties of unsecured debt. This balance between risk and reward makes first mortgage investments particularly appealing.

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‍3. Regular Income

A first mortgage investment with CCG offers sophisticated Investors regular, fixed monthly income through regular fixed monthly income distributions. These distributions provide a predictable and steady income stream. This makes it an excellent option for investors seeking consistent returns and capital preservation, such as retirees or those looking for a stable cash flow to supplement their income.

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4. Diversification

Investing in a first mortgage can offer an interesting way to diversify an investor’s portfolio. Real estate and mortgage investments often move independently of the stock market, providing a buffer against volatility in other investment areas. By adding first mortgage investments to your portfolio, investors can reduce risk through diversification, ensuring a more stable overall investment performance.

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5. Control and Transparency

First mortgage investors often have a lot more control over their investments compared to other investment types. A primary benefit of investing in a First Mortgage with CCG is that you always know where your funds are invested. This is because CCG is a Contributory Fund and not a Pooled Fund.  

In a Contributory mortgage fund, you choose which mortgage investments to invest in, assess the value and condition of the secured property and decide on the terms of the loan, including interest rate and loan duration that you are willing to invest in. A Contributory fund also allows you to do your own due diligence on each Investment as you know the exact mortgage that you are investing into. Unlike a pooled fund, where you won’t know the exact property, you are investing in as investor funds are pooled into a group of investments.  

This level of control and transparency is reassuring and allows first mortgage investors to tailor their investments to their risk tolerance and financial goals. You can read more about the differences between a Contributory and a Pooled mortgage fund on our blog.

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To summarise

Investing in a first mortgage offers a compelling blend of security, attractive returns, regular income, diversification, and control. For those looking to expand their investment portfolio beyond traditional stocks and bonds, a first mortgage investment opportunity provides a secured, tangible, and potentially lucrative option. With proper due diligence and strategic selection, first mortgage investments can be a cornerstone of a balanced and prosperous investment portfolio.

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To find out how you can take advantage of First Mortgage Investment opportunities, get in touch with our Investment Team or give us a call on 1300 795 507.

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