Investor guide
How to invest in private mortgages in Australia: the steps from eligibility to the title
Investing in a private mortgage means lending to one borrower against one property and being named on the security. Here is the sequence, in order, with the checks worth making at each step.
To invest in a private mortgage in Australia, you confirm you are a wholesale or sophisticated investor, review a specific loan, sign loan documents in your own name, fund the loan from your bank account, and are named on the registered mortgage for your share. The borrower then repays you directly.
HomeSec Business Finance, an Australian private lender founded in 2004, invites investors to co-fund individual loans this way. The steps below follow that model, and they are also a good test of any other offer you are weighing: if a step is missing, ask why.
Who is allowed to invest in a private mortgage?
Wholesale and sophisticated investors are the people eligible. Offers of this kind are not made to the general public, so the first job is proving your status. The usual proof is a certificate signed by your accountant and dated within the past two years. It confirms that you hold net assets of $2.5 million or more, or that you earned $250,000 or more gross in each of the two most recent financial years.
Companies, trusts, SMSFs and overseas investors can qualify as well, each with different paperwork. The thresholds have not moved since 2001, and roughly 18% of adults now meet them, according to the figures we track. If you are unsure, our wholesale investor page sets out the tests, and an accountant can tell you in one meeting.
Do this first. A certificate takes days to arrange, and it is the one step you cannot rush on the day a good loan appears.
What does the process look like from first enquiry to funding?
There are six steps, and you decide at the fifth. The order matters because your information grows at each stage while your money stays in your account until the end.
| Step | What happens | Your money |
|---|---|---|
| 1. Register | You tell the lender who you are and how you would invest (personal, company, trust, SMSF) | Not committed |
| 2. Prove status | Accountant’s certificate or equivalent is supplied | Not committed |
| 3. Receive a pack | The lender emails a due diligence pack on one loan | Not committed |
| 4. Review | You, your accountant or lawyer go through the pack | Not committed |
| 5. Decide | You say yes or no, and choose how much to contribute | Still in your account |
| 6. Settle | Loan agreement in your name, borrower signs with their solicitor, mortgage lodged, you transfer your contribution | Transferred at settlement |
At HomeSec, each loan is tested against a 50-point checklist before its pack is sent. Declining one carries no penalty, and the next pack arrives regardless.
To see how those early steps work in practice, ask our Funding Manager to talk you through them.
What should you check in a loan pack before saying yes?
Check the security, the loan-to-value ratio (LVR), the exit and the borrower’s reason for borrowing. The pack should let you reach your own view without relying on the lender’s summary. Our guide to reading a loan due diligence pack goes line by line; these are the headline questions.
- Security and ranking. Is it a first or second mortgage, and who ranks ahead of you? Our page on first and second mortgage investments explains why ranking changes both return and risk.
- LVR. What is the loan as a percentage of the independent valuation? HomeSec’s maximum is 80% on residential property, and lower on commercial. The gap is your buffer if a sale has to happen in a softer market. See LVR explained for mortgage investors.
- Valuation. Who ordered it, who paid, and how old is it? ASIC’s surveillance of private credit funds flagged weak valuation practices, including the same committees approving loans and valuing them (REP 820).
- Exit. How does the borrower plan to repay within 1 to 12 months, and what is the fallback if that plan slips? A clear second exit matters more than a polished first one.
- Property type. Straightforward residential or commercial property sells faster than unusual assets. HomeSec avoids anything that would take a long time to sell, and does no development or construction lending.
What do you actually sign, and whose name is on it?
You sign a loan agreement in your own name, and the lodged mortgage (or caveat) records your exact contribution beside the lender’s. The borrower signs as well, with their own solicitor alongside. That independent advice on the borrower’s side protects the enforceability of your security, which is the point of the exercise.
This is the main structural difference from a pooled fund. In a fund, you hold units and the fund holds the mortgages, so you are one step removed from the property. With a direct loan, a title search shows your name against the property.
A practical tip: ask for a copy of the lodged mortgage and a current title search after settlement, and file them with the loan pack. If an auditor, executor or SMSF accountant ever asks what you hold, the answer is in one folder.
For the wider comparison, see direct mortgage investment versus pooled funds.
How and when do you get paid and get your money back?
Principal and interest land in your own bank account, bypassing both the lender and any pool. Once the loan matures and the borrower repays, your capital and interest return to you. HomeSec also offers to buy out your share if you want out early.
Compare that with a pooled mortgage fund, where withdrawals depend on the fund’s liquidity. Moneysmart points out that government deposit protection does not extend to private credit, and several funds paused or limited redemptions during 2026. A direct loan has no redemption queue because there is no pool, but it does have a term. Your money is committed for 1 to 12 months, and a late repayment is a real possibility.
Returns on the loans HomeSec offers are 12% to 18% p.a., set loan by loan and shown in each pack. Those returns reflect short terms, speed and flexibility, not weak borrowers. Our returns page explains where the number comes from.
What can go wrong, and how is it handled?
The main risks are a borrower who cannot repay, a property that sells for less than expected, and delay. Each is manageable but none is zero. If a borrower defaults, the security can be enforced through the courts in any state, and the lenders, as mortgagee, can move to take possession and sell. HomeSec uses property lawyers nationwide and carries the legal bill for recovering defaulted loans.
The LVR cap is the first line of defence. If a residential loan is at 80% and the property sells for 10% less than the valuation, the lenders are still repaid in full, before costs. Costs, interest and time eat into that buffer, which is why lower LVRs matter on harder-to-sell property.
HomeSec’s own money also sits in every loan it offers to investors, often 50/50. That does not remove risk, but it does mean the lender is exposed to the same outcome as you. Our guide on what happens if a borrower defaults walks through the sequence.
Illustrative example. An investor puts $250,000 into one loan secured by a first mortgage on a residential property at a 70% LVR. They review the pack, confirm the valuation date and the borrower’s exit, and sign in their own name. The loan is repaid in month nine, and the principal and interest arrive in the investor’s bank account. The investor then declines the next two packs because the exit plans look thin, and accepts the third.
How does investing through an SMSF or overseas change the steps?
The steps are the same, with extra checks at the front. For an SMSF, the trustee lends in the fund’s name, and the ATO says the investment must be on arm’s-length terms and consistent with the trust deed and investment strategy. Lending to a member or a relative is not allowed (ATO restrictions). Read our guide on whether an SMSF can invest in private mortgages.
Overseas investors can take part from anywhere, because the whole process runs by email, text and online transfer. Interest paid abroad is generally subject to withholding tax, so settle that with your adviser early. See our overseas investors page.
Where to from here?
Investing in a private mortgage is a sequence of small decisions, each made with the paperwork in front of you. If you are comfortable with that, the next step is simply to see what a real pack looks like.
When you’re ready, ask for the next loan pack and our Funding Manager, available seven days, will explain how co-funding works and which loans might suit your structure. You choose each loan, you are named on the mortgage, and nothing is committed until you say yes.
Frequently asked questions
Who can invest in a private mortgage in Australia?
Private mortgage offers made outside the retail rules are open to wholesale or sophisticated investors under the Corporations Act. The usual route is 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.
How much do I need to put into one loan?
It depends on the lender. With HomeSec you choose how much to contribute to each loan, from $100,000 to several million dollars. Many investors spread a larger sum across several loans rather than placing it all in one, so a single borrower never carries your whole allocation.
Will my name be on the mortgage?
In a direct arrangement, yes. The registered mortgage (or a caveat, if that is the security) lists you as a lender for the amount you put in, next to the lead lender. In a pooled fund you hold units instead and the fund holds the mortgage, so you are not on the title at all.
Where does the interest get paid?
Repayments of principal and interest are sent to the bank account you nominate, rather than through HomeSec or into a fund. That also means you can see your own receipts and records against each loan, which makes tax time and SMSF audits simpler.
What happens if the borrower doesn't repay?
The loan is enforceable through the courts in every state. As mortgagee, the lenders can take possession and sell the property, and a maximum 80% LVR on residential property leaves an equity buffer. HomeSec meets the legal costs of recovery on defaulted loans. Recovery can still take time.
Can I invest through my SMSF?
Often, yes. The loan sits in the name of the SMSF trustee, on arm's-length documented terms, and the trust deed and investment strategy need to allow lending. Loans to members or their relatives are not permitted, so the borrower must be an unrelated party.
Sources
- ASIC — Report 820 on private credit fund surveillance (November 2025)
- ASIC — Media release 25-209MR on private credit standards (REP 814)
- ATO — What are the SMSF investment restrictions?
- Moneysmart — What is private credit?
Figures are as at 14 November 2026 unless stated. This page is reviewed by Jason Brockmuller, Joint CEO of HomeSec Business Finance, and updated as markets change.
