Author: Brock VandenBerg (1 articles found) - Clear Search

Why a Mortgage Fund Makes More Sense than Investing in Individual Trust Deeds

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A mortgage fund is an investment that pools money from multiple investors to purchase mortgages (also known as trust deeds). This differs from investing in individual trust deeds, in which the investor is secured on a single mortgage. In this article, we are going to explore the various benefits of a mortgage fund and why a fund can be a better option than investing in individual trust deeds.

Diversification

The biggest advantage of a mortgage fund is that it is comprised of a diversified over a pool of mortgages. If one of the mortgages from the fund is paid off, or the borrower defaults on the payments, you continue to earn income from the other mortgages in the portfolio. If the loan is paid off, the manager simply replaces that trust deed with a new one.

For trust deed investors, because you are invested in a single loan, your income is dependent on that one loan. If a loan is paid off or the borrower defaults on the payment, your income stream stops. In the case that the loan is paid off, it is then up to the investor to replace the trust deed with a new one.

 Liquidity

The next advantage is liquidity. When you invest in a mortgage fund, you can decide on the size of your investment and the timing. If you are looking to withdraw your investment, you have the option to submit your request to the fund manager and have it returned (keep in mind most funds have restrictions on how investor capi
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