Money Managers has teamed up mortgage specialist McLaughlins Financial Services to offer Australian mortgages in New Zealand.
Money Managers managing director Doug Somers-Edgar says that these pooled mortgage investments offer greater security than contributory mortgages and are based on the booming Australian property.
Somers-Edgar says marketing of two McLaughlins products will start shortly.
"We're offering the McLaughlins Blue Ribbon Income Fund and their Capital Insured Income Fund," he says.
In both funds, individual investments are pooled with those of other investors and lent on mortgages with a loan-to-valuation ratio not exceeding 66.66%. Each mortgage has partial insurance arranged through a policy with Lloyd's of London.
The insurance policy does not cover 100% of the capital invested by the fund.
"There¹s two key differences in these investment products, compared with what has been available in the past," Somers-Edgar says.
"Unlike contributory mortgages where investors fund an individual mortgage, usually for a commercial development, these funds invest in multiple mortgages with mortgage security and partial insurance backing.
"The other factor is involvement in the larger Australian market instead of New Zealand, where strong competition among lending institutions tends to depress returns to investors."
Somers-Edgar says the Capital Insured Income Fund covered mortgages in Queensland, New South Wales and Victoria, while the Blue Ribbon Income Fund restricts loans to Sydney, Melbourne and Brisbane.
The Capital Insured Income Fund currently offers returns of 8.5% annually and the Blue Ribbon Income Fund currently offers 7% annually, both over an initial 13-month term with a 12 month rollover option upon maturity at the current rate.
Somers-Edgar said Money Managers had undertaken extensive research of McLaughlins, including a review of its management and lending processes, discussions with members of their management and lending team and their loan maintenance and administrative functions.
"We're satisfied that McLaughlins' investments are amongst the best available to New Zealand investors for a portion of their fixed interest portfolios," he says.
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