How direct mortgage investing works

Direct mortgage investing means lending your money into one specific, secured loan that you have chosen, rather than buying units in a fund. With HomeSec, you review each loan’s due diligence pack, decide whether to fund it and how much, are named on the registered mortgage, and receive principal and interest directly into your own bank account.

HomeSec Business Finance, an Australian private lender founded in 2004 by Paul Stone, funds the majority of its loans off its own balance sheet. On some loans it invites wholesale and high-net-worth investors to co-fund alongside it, often on a 50/50 basis. HomeSec’s own money sits in every loan it offers you. That single fact shapes everything that follows.

What is direct mortgage investing?

Direct mortgage investing is lending against real estate where the investor holds a share of an identified loan, secured by a mortgage they are named on. You know the property, the borrower, the loan amount, the term and the rate before you commit a dollar.

The loans are short term business loans of 1 to 12 months, made for legitimate business or investment purposes and secured by registered first and second mortgages over Australian real estate. The maximum loan-to-value ratio (LVR) is 80% on residential property and lower on commercial property. There are no development loans and no construction loans.

That is the opposite of a pooled fund, where you own units and the manager decides which loans the pool makes. If you want the full side-by-side, read direct mortgage investment vs pooled mortgage funds.

How does co-funding a loan work, step by step?

The process has six steps. Most investors find the first loan takes the longest, simply because the paperwork is new. After that, it becomes routine.

1. Register your interest and confirm you are a wholesale investor

Co-funding is open to wholesale and sophisticated investors, and you choose how much to put into each loan, from $100,000 to several million dollars. You qualify with an accountant’s certificate, no more than two years old, showing net assets of at least $2.5 million or gross income of at least $250,000 in each of the last two financial years. These thresholds have not changed since 2001. You can invest personally or through a company, trust or SMSF. Our guide to qualifying as a wholesale investor covers the certificate in detail.

2. Receive a loan and its due diligence pack by email

HomeSec sources every loan and assesses it against a 50-point due diligence checklist. Both joint CEOs, Paul Stone and Jason Brockmuller, are involved in every loan decision, and General Manager Catriona Anderson signs off every credit decision. Only then is the loan offered to investors. You receive the pack by email, with an SMS to let you know it has arrived.

3. Decide yes or no, and how much

Read the pack at your own pace. Ask questions. Our Funding Manager is available seven days on 03 9017 8277. If the loan suits you, tell us how much you would like to contribute. If it doesn’t, say no. There is no obligation to take any loan, and no penalty for passing.

4. The loan agreement is prepared in your name

Once you say yes, HomeSec prepares the loan agreement in your name, or in the name of your company, trust or SMSF trustee. The borrower signs with their own solicitor present. That independent legal advice matters: it makes the documents harder to challenge later, and it means the borrower has had the obligations explained by someone acting only for them.

5. The mortgage is lodged and you transfer at settlement

The mortgage (or caveat, where that is the security) is lodged, naming you for your exact contribution alongside HomeSec. You transfer your money from your own bank account at settlement. Your funds never sit in a pool waiting to be allocated. They move when your loan settles, and not before.

6. Principal and interest are paid straight to your account

When the loan matures and is repaid, your principal plus interest goes directly into your own bank account, not to HomeSec. If you need your money back before a loan matures, HomeSec will buy out your share and repay your principal. There is more on this in getting your money back.

What do you receive in a loan pack?

A due diligence pack is the complete file on one loan: the property, the borrower and the terms. It is the same information HomeSec relies on when it commits its own money. The detail varies with each loan, but a pack is built to answer the questions a careful lender asks:

• The security. The property offered, its location and type, its value, and whether your position is a first or second mortgage.
• The LVR. How much is being lent against the property’s value, including any debt that ranks ahead of you.
• The loan terms. The amount, the term (1 to 12 months) and the interest rate you will earn.
• The borrower. Who they are, what their business does and why they need the funds.
• The exit. How the loan is expected to be repaid, whether from a sale, a refinance or business proceeds.
• HomeSec’s share. How much of its own money HomeSec is putting into the same loan.
• The risks. Each loan’s risks are set out in its pack, so you can weigh them yourself.

If you have never read one, our walkthrough on how to read a loan due diligence pack explains what to look at first and which numbers matter most.

What don’t you have to do?

This is the part many investors value most. Direct mortgage investing gives you the control of being the lender without the workload of running a lending business.

You do not need to:

• Find borrowers. HomeSec sources every loan. There is no marketing to pay for and no broker network to manage.
• Assess the credit. The 50-point checklist, the property assessment and the credit decision are done before you see the pack.
• Employ anyone. No staff, no office, no loan administration software.
• Draft documents or run settlement. HomeSec prepares the loan agreement and coordinates the lodgement.
• Chase borrowers. HomeSec manages the loan day to day, including any drawdowns and the borrower’s exit strategy as maturity approaches.
• Fund enforcement. If a borrower defaults, HomeSec’s specialist mortgage and property lawyers act across Australia, and HomeSec meets the legal costs of recovery on defaulted loans.

What you keep is the decision. You choose the loan, the amount and when to stop. HomeSec does the rest, with its own money in the same loan.

Can you invest from anywhere in the world?

Yes. Everything is designed to work remotely. Packs arrive by email, updates come by SMS and email, and your contribution is transferred online at settlement. You can review a pack and confirm your commitment from your phone.

You could be on a beach in Port Douglas, in the Maldives or in Hawaii and still read a pack, say yes and fund a loan before lunch. The loan still settles, the mortgage is still lodged in your name, and the repayment still lands in your account.

For investors living outside Australia, interest paid to non-residents is generally subject to 10% interest withholding tax, or a lower treaty rate, and it is generally a final tax. Your adviser can confirm how that applies to you.

Why does HomeSec put its own money into every loan?

Because it is the most honest signal a lender can give. HomeSec has lent its own money since 2004. When it offers you a loan, its capital sits in the same loan, on the same security, on the same terms. If a loan goes wrong, HomeSec feels it too.

The business also earns mostly when loans are repaid. That aligns its interests with yours: the goal is not to write as many loans as possible, but to write loans that come back.

HomeSec is a founding member of the Australian Short Term Lenders Association (ASTLA), formed in 2010 as a self-regulating body for the sector.

How is this different from a pooled mortgage fund?

The differences are structural, not cosmetic.

In August 2026 several Australian private credit funds paused or limited redemptions. That cannot happen to a loan you hold directly, because there is no pool to freeze.

Who is direct mortgage investing suited to?

It suits investors who want strong, secured income and are comfortable making their own decisions: successful business owners, retirees, SMSF trustees, family offices, and company, trust and overseas investors looking to park capital in Australia.

SMSFs commonly co-fund, with the loan in the name of the fund’s trustee. Trustees should check that their trust deed and investment strategy allow it.

It is less suited to anyone who needs their money back tomorrow, or who would rather not read a loan pack. Each loan runs for its term, and each decision is yours.

Ready to see a loan?

The simplest way to understand direct mortgage investing is to read a real pack. If you’d like to see what one looks like, register your interest and our Funding Manager will be in touch.