La Trobe Financial credit fund has four different options: a liquid cash account, pooled mortgage fund and two classes of peer to peer lending: mortgages secured with a first charge on the assets and mortgages secured with a second charge. The latter group is classed a “high yielding” portfolio.
These last two options are mortgage-based peer to peer lending offers. The investor can choose between a portfolio of possible loans and how much she/he would like to invest in that loan. As a loan on real estate, one advantage is that the secured asset is more likely to appreciate, rather than the other way around (as opposed to car or personal loans).
One disadvantage of this system is that to access the “high yielding” rates, the loan is only secured on a second charge over the asset. This is something to consider when making an investment decision. As these decisions are made on individual loans, some things to consider would be the outstanding amount secured on the property as well as its market worth at the time. La Trobe offers further information on each property available than what is available on the website alone, so make sure you seek this out when making decisions.
La Trobe is a well-established company with good credentials. The company has substantial infrastructure to manage operations in this field efficiently. One other advantage of the product is that you can hold cash in the same fund to easily move between the peer to peer and lower yield options as opportunities arise.
Some things to consider when looking at the available fund options include: can you diversify adequately and to your own satisfaction in this fund? Can the fund sit inside a diversified portfolio in your circumstances? Some of the mortgages available may be development projects: how does that change your perception of the risk profile? How does discussion of over priced housing in Australia affect your consideration of these assets? Does the location of the property increase or decrease risk in this case? Is your portfolio already heavily invested in property directly or indirectly? These are just some of the questions to consider.
Company Name: La Trobe Financial
Product Name: Credit Fund
Advertised Rates: 7.96-11.88%*
Advertised Term: 1-5 years
Minimum Investment Conditions: $1000 per loan. Retail investors welcome.
Best Features: Established company, broad range of options.
Big Questions to Ask High yield investment: does a second charge mortgage fit with your risk profile? Do you feel comfortable choosing the loans to invest in yourself?
Security: First or second charge on assets: depending on product choice.
Phone Number: 1800 818 818
*Product Disclosure Statement dated 15/09/15: rolling returns 1 year to 5 years, Select Mortgages Option and High Yield Credit Option, p. 9.