How to Make Your Money Work for You

So, what exactly is a mortgage fund, and how does it fit into a modern investment portfolio? This guide will walk you through the essentials of mortgage investment in Australia, what it is, how it works, and why it may be the right strategy for investors looking to invest in mortgages backed by Australian property.

What Are Mortgage Funds?

A mortgage fund is a type of managed investment scheme where pooled investor capital is lent to borrowers; commonly property developers or commercial borrowers with the loans secured against real estate assets. Investors may receive income distributions from the interest paid by borrowers.

Unlike direct property ownership, mortgage funds are generally designed to generate income rather than capital growth. For wholesale investors, this structure can provide exposure to property-backed lending, with the potential benefits of cash flow, security over real assets, and diversification—without the complexities of managing physical property.

Mortgage funds remain particularly relevant in the Australian market, where demand for private capital in the property sector continues to be strong. At 268 Fund, we focus on curated, direct mortgage investment opportunities, giving wholesale investors access to secured property loans with targeted, risk-adjusted returns. All investments carry risk, and investors should review the Information Memorandum (IM) and Supplementary Information Memorandum (SIM) before investing.*

How Do Mortgage Funds Work?

Mortgage funds operate by pooling capital from investors and using it to provide short- to medium-term loans secured by real estate. Here’s how it typically works:

• Investor funds are aggregated into a managed mortgage fund structure.
• The fund lends capital to vetted borrowers, such as developers, who require financing for residential, commercial, or mixed-use property projects.
• These loans are secured against the property itself, acting as collateral.
• Investors earn income from the interest charged on the loan, which is paid monthly or quarterly, depending on the fund structure.

At 268 Fund, we go a step further by offering direct investments in single-loan mortgage trusts. This means investors can select individual projects that align with their goals and risk preferences, unlike traditional pooled funds, where assets are bundled together. Each loan is isolated in a separate trust, and funds are returned to the investor at the end of the term, giving them the choice to reallocate or withdraw.

Benefits of Mortgage Funds for Investors

Mortgage funds offer a number of strategic advantages, especially when accessed through an experienced non-bank lender like 268 Fund:

1. Regular Income Generation

Investors receive consistent interest payments, typically distributed monthly.* This makes mortgage funds ideal for those seeking steady passive income from their portfolio.

2. Capital Preservation

Each loan is secured against Australian real estate. With loan-to-value ratios at 68 – 72% (LVRs) and strong due diligence processes with further reduce risk.

3. Portfolio Diversification

By investing in mortgage funds, wholesale investors gain exposure to the real estate sector without owning property directly. This adds a layer of diversification that can complement equities, fixed income, or other private market assets.

4. Tailored Investment Structures

At 268 Fund, we offer both debt and equity investment opportunities, allowing investors to tailor their exposure based on their income needs, risk tolerance, and investment timeframe.

Why Choose 268 Fund’s Mortgage Investment Solutions?

There’s a reason why more wholesale investors are turning to 268 Fund for their mortgage investment needs:

• Track Record: We review over $1 billion in property-backed opportunities annually and have a 100% capital and interest repayment record since inception.*
• Transparency: Each mortgage investment is structured as a standalone trust. Investors know exactly where their capital is deployed, with no cross-contamination of risk.
• No Auto-Reinvestment: Upon loan maturity, your capital is returned, which is ready for you to reinvest in your next selected opportunity or withdraw.
• Conservative LVRs: We focus on asset-backed security, hold additional security properties and manageable risk profiles to ensure investor protection.

Whether you’re a seasoned investor or new to the space, our approach offers clarity, control, and access to premium investment opportunities not typically available to retail markets.

Key Considerations Before You Invest in Mortgages

Mortgage funds are not one-size-fits-all. Here are some important factors to keep in mind:

Loan-to-Value Ratio (LVR)

LVR reflects the amount of the loan relative to the secured property’s value. Lower LVRs indicate lower risk. 

Borrowers and Builders 

Before considering any investment opportunity, it’s essential to understand who you’re lending to and why. We carefully assess each borrower’s experience, builder history, project viability, and repayment strategy before a loan is approved.

Liquidity and Exit

Mortgage investments are typically fixed-term, so capital may be tied up for 6–24 months. However, our investment calculator can help you estimate returns and align your choices with your cash flow needs.

Regulatory Requirements

These investments are available only to wholesale or sophisticated investors who meet specific eligibility criteria. We assist clients in confirming their eligibility and providing the necessary certification.

Explore Direct Mortgage Opportunities with 268 Fund

If you’re a qualified wholesale investor looking to generate stable income and expand your portfolio, mortgage funds could be the strategic solution you’ve been seeking. With 268 Fund, you’ll benefit from curated investments, and a proven track record.

Ready to get started? Explore our current direct investments or speak to our team to learn how our opportunities can help you reach your financial goals.

Disclaimer

The information presented on this page is for general guidance only and does not constitute financial, legal, or investment advice. You should seek advice from a licensed financial advisor or legal professional to determine your investor classification and the suitability of any investment for your specific circumstances. Wholesale investing carries risks, and past performance is not a reliable indicator of future results.