Private mortgage

Hi guys, I'm wondering if anyone has tried private mortgages (lending and taking first mortgage) as a form of investment and if so, any thoughts on the process? I had a look around and there seems a few platforms around. With the large volumes of settlements coming through and APRA measures/ foreigner restrictions, this would seem an emerging area possibly. Appreciate any thoughts.

 

Only need to comply with NCCP if it is a coded loan and then there are a number of legal ways around it. (Loans to Super Funds, 62 day rule etc etc)

Do however need to hold an ACL or be a Credit Representative of an ACL holder.

We have a separate Company that only does Private lending and we are extremely busy.

 

Hi J61

Private mortgages take a significant amount of attention and I say experience. The top guy I deal with in this field is Home | Vernons Solicitors Raoul Vernon is the bloke the created low doc loans.....happy to have him on my side. I was going to get into this years ago but there is way too much involved. If you donot have experience with private lending i'd steer away or partner with someone who knows their stuff. I have many clients with private loans and many who loan their money out, review La Trobe's products which I think are top notch (not a recommendation) to give you a background....check out their PDS.

Cheers Ivan

 

We have around $46M out in Private Lending and having been doing it for 20 Years.

Totally agree with Ivan that it is not an area to enter without experience or a total understanding of the associated risks.

Paul Reese of Summer Lawyers is the leading expert in the field and acts for around 80% of the major players In the market.

For every 1 new entrant we see 2 disappear as they either run out of money or didn't understand the complexities in the transaction.

Be amazed how many so called top lawyers loan documents we have seen that didn't provide the investor with any element of security or where even compliant.

 

I know a family that does private lending. They will not lend to the retail market, they will only lend on registered first mortgage and they will lend to infamous people within 4 hours.

It works but you need to know exactly what you are doing.

That family now prepares their own paperwork as they could not find a lawyer who would always get everything correct.

I could not do it. Most of the time they are fighting a liquidator for their money and they never, ever, make mistakes on their documents.

It is a rare skill. If you can do it great - but high risk unless you are unique.

Again - I could not do it. And I am trained at this stuff.

 

Many thanks guys. By the sounds of it, the underwriting is based on a fair likelihood of the loan eventually moving into default and ensuring the legal docs are absolutely tight in protecting rights in different recovery scenarios. It also sounds like its best to partner with an experienced broker/ lawyer to facilitate.

 

what are the interest rates like?

 

2%

 

A month.

 

Plus fees.

 

This type of lending has been around for a long time. Way back when they were called solicitors loans as they were usually private arrangements organised between two parties by a solicitor.
Marg

 

It's a long way to go until we get back to the restrictions of the 1980s when we started investing!
Marg

 

I can't see it. As Rolf said it's only applicable to companies lending mostly for commercial property. It's only available for resi property short term. So bridging or development finance etc.

It's not like the old days where anyone could rock up and use a solicitor loan to buy a house to live in or rent out.

 

Uber expensive.
Lender of last resort loans can make your toes curl. We looked at a client doing this and found the $40K fee plus massive margin on rate. And its a a almost zero risk. They wont touch low risk and forget marginal risk.

 

Yes significant demand always, both for people lending out their money chasing a higher return and with the developers not being able to fund projects through traditional sources they have resorted to the good'ol private mortgages. All comes down to collateral.

Further with our chinese friends being cut out of the big 4 they had a choice - either private loan at 10% or lose your deposit.....alot of them lost the deposit. There is a big market for our chinese friends in this space the issue is having someone on the ground here to run the company or be director.

Cheers Ivan