General Investment Questions

What is a mortgage?

A mortgage is simply a debt instrument secured by a registered charge on real estate. It secures an agreement by the borrower (mortgagor) to the lender (mortgagee) to pay a certain amount of money on stipulated terms and conditions. A mortgage is registered in the Land Titles Office and cannot be removed other than with the consent of the lender or by a court order.

Why invest in mortgages?

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 reneges on their obligation to pay there is a legal right to sell the property to recover the debt.

Rate of return
Investments in private mortgages can consistently earn between 6.00% and 15.00%pa depending on the degree of risk you wish to take. Interest can be re-invested in La Trobe Financial's pooled accounts to provide you with an even greater return. This rate of return can compare favourably with other forms of investments.

Security
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.

Low Volatility
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.

Diversification
Investment in a range of 'Select Mortgages' can reduce the volatility associated with individual market segments, and accordingly help you protect your assets.

You choose the real estate mortgage that you think is right for you
A unique feature of the La Trobe Financial Fund is our 'Select Investment Account' which means before you invest, you and your financial adviser can review the details of the borrower and the proposed loan, including investment term, interest rate, and payment terms together with a description of the project or property used as security for the loan. Based on this information, and your own personal circumstances, you make the decision to invest or not.

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 for example.

Periodic Income
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.

Professional Management
La Trobe Financial 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.

What is a credit fund?

A credit found is a trust structure that is operated by a fund manager which invests in various asset classes including loans secured by mortgages over real estate property.

Our credit Fund receives investors' money and uses it to make loans secured by mortgages. You, as an investor, then receive the net interest payments on those mortgages, after the Investment Manager deducts fees and expenses in running and operating the Fund. These loans can be secured by mortgages over retail, commercial, construction and development, industrial or residential properties. A credit Fund is not a debenture scheme, as each investment is held in trust on behalf of the investors in the Fund.

How do I invest in Mortgages?

Through the Fund La Trobe Financial sources and assesses loans on behalf of our investors. We take care of all the work for you by dealing directly with the borrowers. You then select the investment opportunities you wish to invest in.

What does LVR mean?

LVR stands for "Loan to Valuation Ratio". It is the loan amount compared to the valuation amount of the property offered as security for the loan. The higher the LVR the less equity the borrower has in the property used as security for the loan. It is generally safe to say that the higher the LVR, the greater the risk, all other things being equal.

Can I invest and assit my children buy a home?

Yes. We can help you and your children through our Parent-to-Child loan.
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Investing With La Trobe Financial Questions

What does La Trobe Financial do for investors?

We employ trained professionals who have obtained the experience required in order to operate the Fund. This ensures we provide a level of care, a knowledge of mortgage products and other asset classes and a standard of service to meet your investment needs. Our wealth of lending experience allows us to quickly review and qualify property for lending.

Our role is to find and structure deals that are suitable for mortgage financing. Once the loan is pre-approved by us, we make the investment opportunity available to the Fund members. For this service we are paid a fee by the borrower, not by the investor.

Why use La Trobe Financial to invest?

La Trobe Financial is committed to product excellence, investment security and service. We have over 65 years of experience in real estate financing and asset management. We draw from these years of experience in the financial industry to serve your mortgage investment needs. All investments are vetted through a credit analysis process prior to them being presented to you, the investor. Seeking to preserve your capital is first and foremost in every investment opportunity we review. Our commitment to excellence includes the following criteria:

  • Appropriate real estate security
  • Additional collateral required when appropriate
  • Short term (1-5 years) to minimise risk
  • Pre-planned exit strategies
  • Full team of legal and project advisers
  • All mortgage investments are arm's length from La Trobe Financial
  • Independent valuation on all security
  • Credit checks on all borrowers

How much does it cost me upfront to invest in the Fund?

Nothing. All upfront costs are paid by the borrower at the application stage of the mortgage and there are NO investment ENTRY FEES . You as the investor do not pay any establishment fees in relation to your investment. All establishment and loan management fees are paid by the borrower. La Trobe Financial does not charge a Trustee fee. The “Fees & Charges” section of the Product Disclosure Statement (PDS) details fees that may be payable by you as investor.

Can I invest in a Mortgage if I am not an Australian resident? If I can, how much tax will I pay?

Persons who are not Australian Residents are allowed to invest in registered managed investment schemes such as the Fund and will, in most cases, only pay 10% of the interest earned each month as a withholding tax.

What's the minimum/maximum investment amount?

The minimum investment amount is $1,000.00; the maximum amount is unlimited for the 12 Month Term Account and Classic 48 hour Account. Select Investment Accounts are limited to the amount of funds required for investment in each loan. Our High Yield Credit Portfolio has a minimum investment amount of $100,000. La Trobe Financial however, reserves the right to reject an investment amount if it is not in the best interest of all investors.

Will my name be on the title when I invest in a Select Investment Account?

La Trobe Financial as the Responsible Entity of the Fund is listed on the title as the mortgagee. The benefit of this is that substitutions of mortgage investments can be processed immediately without the delay of having a transfer of mortgage completed.

Does requesting details on a mortgage investment commit me to that particular investment?

No. If you utilise the Select Investment Account or High Yield Investment Account a Supplementary Product Disclosure Statement (SPDS) is provided to you detailing the specific details of the investment you are considering. Once you have signed and returned the SPDS to La Trobe Financial you have made a commitment to invest.

What's the time delay between requesting a Supplementary Product Disclosure Statement (SPDS) and actually going into a mortgage investment?

We endeavour to send SPDSs to you the same day you have requested them. SPDSs can be faxed, emailed and posted to you. It is important to note that your investment can only be placed in the mortgage investment selected when La Trobe Financial has received your original signed SPDS and holds clear funds for investment.

Can I view my account online?

Yes, register via our website to access our online investor platform La Trobe Direct.

La Trobe Direct gives you 24/7 user friendly, safe and secure access to your investment accounts with the ability to review your balances and transactions as well as make new investments.

Click here to register

To assist with the registration process you will need the following on hand:

  • Your investor account number(s)
  • Mobile phone
  • Email address
  • Tax file number(s)
  • Bank account details
You will receive text messages and emails to keep you up to date with the progress of your registration.

When, what and how does your Authorised Representative get paid ?

La Trobe Financial currently pays Authorised Representatives a fee for introducing investors to the 12 Month Term Account or Select Investment Account and High Yield Investment Account of The Fund.

What is the affect on investors of losses suffered following a mortgagee sale?

The Fund does not guarantee investors' capital. The following order of priority applies to payment of money received following a mortgagee sale in accordance with the PDS and La Trobe Financial’s obligations at law:

  1. First, towards payment of liabilities having priority at law to the Mortgage Investment, for example, Council Rates, GST obligations & liquidator’s fees;
  2. Secondly, in payment of La Trobe Financial’s or the Investment Manager’s fees, charges and other costs or expenses incurred in the proper performance of duties (including legal costs on a full indemnity basis);
  3. Thirdly, in payment of the Investor’s capital investment; and
  4. Fourthly, in payment of any interest at the lower rate, and thereafter at the higher rate (if applicable), as it falls due to which the investors are entitled but not yet paid.
You should be aware that GST may be payable on the sale of a property by La Trobe Financial in certain circumstances and this will reduce the funds available for distribution to investors, in accordance with priority (iii) above.

Where funds are recovered from the borrower or any third party subsequent to the distribution of proceeds following the sale of the security property, those funds will be distributed to investors according to the priority of their original investment.

What else should I know?

Please take time to read through the Product Disclosure Statement (PDS) regarding our managed investments and discuss it with your financial adviser. In preparing the PDS, we have not taken into account your investment objectives, financial position or particular needs. Before making an investment decision, you may need to obtain and consider independent advice about whether the investment is suitable in light of your individual or personal circumstances.

La Trobe Financial and its Authorised Representatives do not provide financial product advice.


Investor Reporting Questions

What reports are available?

Investors receive electronically (and by post at investor choosing) the following regular reports:

  • 12 month term account maturity report
  • Detailed investor activity statements
  • Financial year income taxation statement

Do you have access to up-to-date fund information as an investor?

We aim to provide investors with up-to-date information about the Fund, to help investors monitor their investments in the Fund. In addition, information that is not materially adverse is subject to change from time to time and may be updated. You can obtain up-to-date information about the Fund at any time by;

  • making enquiries to La Trobe Financial's toll free Investor number 1800 818 818
  • logging on to La Trobe Financial's website at www.latrobefinancial.com
  • checking with your La Trobe Financial Authorised Representative
  • reading the Fund's quarterly update, available by phoning
    La Trobe Financial or by email.

How long after investing do investors start earning?

We will acknowledge receipt of your investment within 5 business days of receipt. Your money will be invested once your funds have been cleared, and you will start earning interest immediately.


Investment Options Questions

What investments do you suggest?

We cannot recommend or suggest any one specific mortgage investment or Fund account over another as we are not licenced to provide "financial product advice". We can however give you factual information about the products of the Fund and the Fund itself and we leave the choice up to you.

For instance you have four (4) investment choices for your money in the Fund :

  • 1: Classic 48 hour Account generally with 48 hour access* to your money;
  • 2: 12 Month Term Account where La Trobe Financial chooses the mortgages and interest is paid monthly for an initial 12 month period;
  • 3: Select Investment Account where you choose the mortgage and term on a Peer-to-Peer basis;
  • 4: High Yield Investment Account. 3 year term and higher risk/yield credit investments chosen by you (eg: second mortgages, RMBS, et al).

Are second mortgages in the High Yield Investment Account safe?

These investment options are very rare and La Trobe Financial do not offer them with any frequency.

Second mortgages attract a higher interest rate due to higher risk. A second mortgage is second in priority to the first mortgage. This means that the second mortgage does not receive any funds until the first mortgagee has received all their entitlements i.e. principal and all interest and fees. Ultimately it depends on, among other things, the security property and the performance of the borrowers; there is still investment risk (refer to the PDS) involved and a second mortgage would be considered riskier than a first mortgage.

What is the difference between the 12 Month Term Account and the Select Investment Account & High Yield Investment Account?

With the 12 Month Term Account you share the investment risk with all other investors in the 12 Month Term Account. You don't receive Late Payment Fees with the 12 Month Term Account as interest is paid to you each month.

With the Select Investment Account & High Yield Investment Account the performance of each investment you make is directly related to the performance of the investment you have selected. Interest cannot be paid to you unless the borrower has made their interest payment. If the borrower makes a payment late you may be entitled to receive half of any Late Payment Fee collected. If a Select Mortgage repays early, you may also be entitled to receive half of one month's interest if an Early Repayment Fee is collected, this will depend on the loan type and is at the discretion of La Trobe Financial.

Can I invest in more than one account within the Fund?

Yes. A minimum investment of $1000 applies to the Classic 48 hour Account and 12 Month Term Account. Generally both the Select Investment Account and High Yield Investment Account require a $1000 minimum investment, although this may be varied in the SPDS made available to investors. Our High Yield Investment Portfolio has a minimum investment amount of $100,000

What type of security properties and to what level of LVR will be funded by the 12 Month Term Account?

La Trobe Financial's lending guidelines as applied to "Select Investment Account & High Yield Investment Account" will also apply to loans funded by the "12 Month Term Account". Whilst the Fund can accommodate loans to a maximum LVR of 75%, only prime residential securities will be considered to this level. Generally the maximum LVR of 66% will apply, with lower LVRs for Commercial (up to 70%) Rural (up to 55%) and specialised securities. The 12 Month Term Account does not invest in loans which are secured by a second mortgage.

How does an investor's investment rank in the 12 Month Term Account?

The interest of an Investor in the 12 Month Term Account is as a tenant in common; in the same proportion as the amount the investor has invested to the total amount invested by all investors in the 12 Month Term Account.

Do I need to complete an SPDS for the 12 Month Term Account or the Classic 48 hour Account?

No. Investments in the 12 Month Term Account or the Classic 48 hour Account are made through the Product Disclosure Statement only. Once an investor has completed the Fund Application Form and ticked the 12 Month Term Account or the Classic 48 hour Account, there is no further paperwork required to invest in these options.


Investment Risk Questions

What are the risks associated with investing in mortgages?

The risks of the investment are outlined in the Product Disclosure Statement but may be summarised as:

Value of Underlying Real Estate
Mortgages are generally considered low risk investments in a stable or rising real estate market because they are backed by real property. In a declining market, the value of the underlying real estate must drop to below the value of the mortgage registered against the property and recovery costs before the investment is at risk. Based on the expected changes in the market, the LVR at the time of the initial loan is set conservatively to reduce the risk of loss.

Funds Held in Trust
Moneys invested by you are held "in trust" by La Trobe Financial to be used only for the agreed purpose. When payments are received from the borrower, these amounts are also held "in trust" until distributed back to you, the investor. These trust funds, and the transactions related to them are regulated by the Corporations Act, are audited annually, and reviewed by the Australian Securities and Investments Commission (ASIC) which is responsible for licensing Managed Investments Schemes. The integrity and soundness of the Investment Manager is critical. We are regulated by ASIC and not Australian Prudential Regulation Authority (APRA). Your investment in the Fund is not a bank deposit.

The Product Disclosure Statement at section 8 entitled "Investment Risks" outlines other risks and you should read this before investing.

Why have a Credit Fund in your Portfolio?

Credit Funds can provide Investors with superior investment returns than cash management trusts, and are less volatile than share or equity based investments. Apart from the rate of return, credit funds can give you an extra level of diversification. Given that credit funds are not closely correlated with returns from other asset classes, adding a credit fund to your portfolio may smooth the volatility of your total investment returns.

How Safe is Your Money?

Investing in credit funds is not without risk, as the value of the underlying security can fluctuate. As such, the lending parameters of each credit fund should be individually assessed to ascertain what levels of risk you are comfortable with. Please read the section entitled 'Investment Risks' and 'Asset Selection Criteria' in the Product Disclosure Statement. You may also choose to discuss these issues with your financial adviser.


Interest Returns And Payout Questions

Does the interest rate return reflect the risk of the loan?

A number of factors influence the interest rate of a mortgage. These include the type and location of the property and the borrower's credit history. Usually a residential property has a lower interest rate than a commercial or rural property. However this doesn't mean residential properties are less risky. All loans are dependent on the borrower making their payments and repaying the loan.

What is prepaid interest as shown on the P2P Investment List of available mortgages?

Prepaid interest is when an amount to cover the interest has been included in the total loan amount or where the borrower has made payments in advance and those payments are held in trust within the Fund. Interest is then paid periodically as detailed in the SPDS. Generally prepaid interest does not apply to consumer regulated loans.

Is a prepaid interest loan better than a loan that doesn't have prepaid interest?

Prepaid interest means that La Trobe Financial is holding the borrower's future interest payments in trust within the Fund. Prepaid interest provides certainty that interest for the loan term will be paid to you on time. However, it does not provide any greater certainty that the principal will be repaid on time.

Does prepaid interest mean that I won't lose my money?

Prepaid interest provides certainty that interest payments will be paid to you on time during the prepaid interest period. However, it does not guarantee you against loss. Like all loans, loans with prepaid interest still need to be repaid in full or renegotiated for a further period at the end of the loan term. If the borrowers are unable to meet their loan maturity obligations, La Trobe Financial will start its loan recovery actions.

How often is my interest paid and where is it paid?

For the Classic 48 hour Account and the 12 Month Term Account interest is paid monthly in arrears and will be paid as directed by you either direct to your nominated financial institutions account or reinvested.

Interest for Select Investment Accounts will be paid according to the Select Mortgage Investment chosen by you and paid as directed. Usually interest is paid monthly.

Can interest for the 12 Month Term Account be compounded?

Yes, you can have your interest reinvested in the 12 Month Term Account. However, it is important to note that reinvested interest requires 30 days written notice to be withdrawn.

How will loan arrears affect investors' monthly returns in the 12 Month Term Account?

Whilst we expect that some loans will fall into arrears, the Fund will continue to distribute interest to investors on a monthly basis. It is our intention to pay a consistent interest rate to investors on a monthly basis despite peaks and troughs in receipts from borrowers' interest payments.

Can I withdraw my investment early from the 12 Month Term Account?

The 12 Month Term Account is a fixed term investment of 12 months. Generally early redemptions from the 12 Month Term Account are not permitted*. If an early withdrawal is permitted and early withdrawal fee of 1.5% of the withdrawal amount (minimum $500) will apply.

What if I need my money back before the loan expiry for a Select Mortgage?

Select Investment Accounts are treated as fixed term investments. La Trobe Financial is under no obligation to process a withdrawal request during the agreed term of the investment. La Trobe Financial may at its discretion consider requests for withdrawal, only if a substitute investor is available. If a replacement investor is found an early withdrawal fee of 2.5% of the withdrawal amount (minimum $500) will apply.

If I choose to withdraw my investment, how long does it take to get funds paid out?

Investors in the Classic 48 hour Account generally have access to their money 2 business days after La Trobe Financial has received your written notice and we can credit your nominated financial institution's account with the requested funds*. In the 12 Month Term Account, investments are subject to a minimum investment period of 12 months. After this time, you can structure ongoing access (refer to PDS) to your cash after the minimum initial investment period through the Regular Access Investment option. Your complete investment will be rolled over into a further 12 month period unless 30 days written notice is received prior to the maturity date. With the Select Investment Account and High Yield Investment Account, La Trobe Financial is under no obligation to process a withdrawal request during the agreed term of that investment. La Trobe Financial may at its discretion consider requests for withdrawal, only if a substitute investor in the same mortgage option is available. Such withdrawal is subject to an Early Withdrawal Fee.

If a loan I have invested in is in default, and the loan term has expired, what is La Trobe Financial doing to protect my interest and how long will it be till I get my money back?

La Trobe Financial generally takes legal action to recover the debt, but in many instances legal action may not be required if a repayment arrangement has bee agreed to. If the matter needs to extend to legal action a judgement for possession may be required. Once judgement has been entered against the borrower, La Trobe Financial obtains physical possession of the property and will then market the property for sale. Once the property is sold, settlement usually takes place between 30 and 90 days. Our Asset Management team will provide regular written updates to you on the recovery process, and your monthly Investor Statement will detail the amount of interest (including default interest if applicable) owing to you.