With a Contributory Mortgage, Does My Name Go On The Mortgage?

Posted December 20, 2017

A common question we get asked is ‘If I invest into this type of mortgage, does my name then go on the mortgage?’

The answer to that is yes and no. It’s really up to the investor.

But more importantly why would an investor choose one over the other?

Check out a couple reasons why for each below.

Investor on title

1/ Our investors are sophisticated or wholesale investors. Some of them actually manage other wholesale funds where they have raised money from the public. They have a compliance policy that states they must hold the Certificate of Title themselves. So their name must go on title. When that happens, you don’t really have any variation there. The mortgage must go in the name of the investor.

2/ Legacy from when they have been property buyers or property owners. They like to have that feeling of control. If you’re investing directly into property, you’re doing it for a reason. It’s because you like to be able to drive up and see your investment. When you start to do mortgages, you want to maintain that feeling, that emotional attachment to it.

Via a trustee

1/ Disclosure. Some investors don’t want borrowers to know their identity, putting a trustee in between is one way to ensure that.

2/ Administration. A lot of contributory mortgages are contributory because they’ve got more than one investor on them. Sometimes they may have ten investors. So you can imagine if you’ve got to put all ten investors on the title, it can be a little bit of a nightmare, especially when you want to vary the mortgage and make changes to it. You have to get all of the signatures. It just becomes a little bit of overload. Doing this via a trustee cuts out the admin for an investor.

Watch the video below for more information.

For an appointment with a Product Specialist, call the office on 1300 652 158.

Hi everybody. I’m Daniel from AR Mortgages. If you’re already a subscriber
to my blog or YouTube channel, you already know about the benefits of
investing directly into private mortgages. Today what I want to cover is
one aspect of that, and it’s based around a contributory mortgage
investment model.

It’s often a question I get asked is that, “If I invest into these
mortgages, does my name go on the mortgage?” The answer to that is yes, it
does sometimes, and no, it doesn’t sometimes. It’s really up to the
investor.

But more importantly what I want to cover today is why you would choose one
over the other, and I’m not advocating either way. But what I’m saying is
sometimes it makes a lot more sense to go with one over the other, and that
depends on your particular circumstances.

So let’s start with why an investor would want to go on title. Some of our
investors or all of our investors are sophisticated or wholesale investors.
Some of them actually manage other wholesale funds where they have raised
money from the public. They have a compliance plan, and their compliance
plan or compliance policy rather says that they must hold the CT
themselves. So their name must go on title. So when that happens, you don’t
really have any variation there. The mortgage must go in the name of the
investor.

The second reason is really a legacy from when they have been property
buyers or property owners. They like to have that feeling of control. If
you’re investing directly into property, you’re doing it for a reason. It’s
because you like to be able to drive up and see your investment. When you
start to do mortgages, you want to maintain that feeling, that emotional
attachment to it. The reality is when you put a trustee in between you and
the borrower, if you’re not happy with the trustee, you can always sack
them. There’s no reason to not be able to get out of that.

Okay. Let’s look at the reasons why people invest via a trustee. The first
reason is because of disclosure. Some investors don’t want borrowers to
know their identity, or they don’t want them to be able to find out easily.
So that’s why they put a trustee in between.

The second, probably more important reason, is from an administrative point
of view. A lot of contributory mortgages are contributory because they’ve
got more than one investor on them. Sometimes they may have ten investors.
So you can imagine if you’ve got to put all ten investors on the title, it
can be a little bit of a nightmare, especially when you want to vary the
mortgage and make changes to it. You have to get all of the signatures. The
sun and the moon have to align. It just becomes a little bit of overload.

The more important reason why we like to hold the CT in the trustee when
we’ve got multiple investors is really based around the fact that when we
settle a deal, we don’t usually sell off the units in that sub-trust all in
one heap. In fact, it usually happens over a matter of days, weeks, or even
months. When that happens, you don’t want to have to be re-registering on
title every time you get a new investor on board.

The third reason on that point on administration is investors sometimes
like to sell out and buy into loans once they’re on foot. When that
happens, you don’t have to re-register all the time. You just want to make
an amendment for the sub-trust.

Okay. So there you have it. There are the main reasons. If you’d like to
know more information, give us a call on the 1300 number for an
appointment. But otherwise, make sure you subscribe to our blog and get
access to real-time information on investing and investment tips. Thanks
for watching.

Admin