First Mortgage Bank

First Mortgage Bank

By: Ross Bainbridge

First mortgage bank invest in mortgages over residential or commercial properties, as well as liquid investments such as cash and bonds. This provides an added advantage for the investors to redeem funds at short notice. In response to the problems of well-publicized failures of mortgage trusts, all mortgage trusts have been brought into line with the requirements introduced by the Managed Investments Act from July 2000.

This means that investors would be able to deal with sound financial institutions when investing in mortgage trusts. Mortgage trusts are popular investments for investors who have a 12-month or longer investment horizon and are looking for a yield that compares favorably with cash management trusts or fixed term deposits. Some of the famous mortgage trusts managers are ANZ Managed Investments and ING. Cash levels in these trusts are usually between 10 and 30 percent of the assets.

Mortgage trusts offer regular income and ready access to requested funds. Income from mortgage trusts is paid monthly or quarterly, depending on the manager. At between five and seven percent, their current return is compared favorably with fixed term deposits and cash management accounts. This can be advantageous in an environment where official interest rates are dropping, yet a disadvantage when interest rates rise. A more conservative investor would like to invest in a mortgage trust with a good exposure to variable rate loans, which will typically move in line with interest rate changes.

To invest in mortgage trusts, one will need to obtain a prospectus. Mortgage trusts generally have no entry and exit fees, while annual fees is typically in the range of one to two percent of funds invested.

The first mortgage services include valuating your property, as well as ensuring that all legal documentation is in your name. When a financial institution is to sanction a loan against property or vehicle, they need to ensure that the loan applicant holds all ownership rights. First mortgage services also include the paperwork as well as payment or installment pick-ups. One of the most enticing first mortgage services offered by a large number of financial institutions is that of insurance and investment strategies that aid towards bank loan repayment.