Holding a registered mortgage against ‘real property’ allows you to invest in the loan that the mortgage secures with the knowledge that if the borrower defaults on their obligation to pay there is a legal right to sell the property to recover the debt.
Investments in private mortgages can consistently earn between 6.00% and 15.00%pa depending on the degree of risk you wish to take. Earnings can be invested in Zank Income Fund to provide you with a lower risk return.
Mortgage investments are secured by tangible assets that you can ‘touch and feel’. Typically the loans which are secured by a mortgage are based on a percentage of the appraised value of the real estate security also referred to as the Loan to Value Ratio (LVR). By combining a lower LVR with short loan terms (the length of time the loan is outstanding) the likelihood of the value of the real estate security dropping below the value of the mortgage is, in a normal market, considered minimal.
Mortgage investments can have a stated interest rate for the length of the loan that typically is constant. You know what you will earn on your investment when you make it unless it is a variable rate investment.
Investment in a range of ‘Select Mortgages’ can reduce the volatility associated with individual market segments, and accordingly help you protect your assets.
Loans that are secured by a first and second mortgage can include the following purposes:
- Purchase or refinance of existing property
- Construction & development
Security offered for the loan can include residential, commercial and industrial property as well as vacant land and rural property.
Once the borrower receives loan funds, they are required to make regular periodic payments of interest. This payment of interest provides you, as the Investor, with regular periodic cash flow.
Zank & Company manages all the details of the mortgage loan. We co-ordinate all the legal documentation, ongoing mortgage administration and mortgage renewal negotiations. We collect your interest due and pass it on to you, the investor. Fees for this service are paid by the borrower via a management fee which is paid with the borrower’s interest.