FAQ's

Q. How can I invest in Master Mortgage Fund No. 6?

A. Should you elect to invest in a particular mortgage investment, please:

Q. What is a mortgage investment?

A. Master Mortgage Fund No. 6 is a contributory mortgage scheme. This means that you have the final decision as to which Mortgage Investment your funds are ultimately placed.

In a contributory mortgage scheme, your investment funds are held by Guardian in a bank trust account earning interest at current cash management rates until they are invested into a specific mortgage scheme selected by you. Your investment is allocated to the scheme you select with the loan secured by a registered mortgage over the security property. The interest you receive on your investment is either paid by the borrower or capitalised in accordance with the loan documents and paid from the interest capitalisation facility as outlined in each SPDS.

Q. What’s the difference between this type of investment and the recent collapses of other major property investment companies.

A. With a contributory mortgage scheme, each investor has a beneficial interest in that mortgage in proportion to the total amount of funds contributed to that mortgage. This means that should the borrower be in default and the secured property is subsequently sold, each investor will receive (after deducting selling costs and other professional fees) their proportion of the net sale proceeds in the same proportion of their investment to the total investment in that mortgage.

With the more recent publicised collapses, investor funds were provided to a company via debentures or unsecured notes. These funds were then on-lent to developers, in many cases to associated companies within the same group as the promoter. Investors did not have a beneficial interest in any particular mortgage and had to rely on the expertise of the management of the company to protect their investment. In many cases these investor funds were treated as quasi equity by the company which ranked behind other secured creditors.

Q. Where will my funds be invested?

A. Investors’ funds will be used to fund a range of projects to experienced developers and secured by registered first and/or second mortgages plus directors’ guarantees and other forms of security. Full details of each Mortgage Investment offered to Investors will be provided in the Supplementary PDS (SPDS) applicable to that relevant Mortgage Investment.

Each SPDS will include the interest rate paid to investors, term of the investment, details of the borrower, location of the secured property, background of the borrower and its directors, loan to value ratios, fees and applicable charges, and supporting information such as a valuation summary from a Guardian approved valuer.

Q. Who can invest?

A. The investment is suitable for all types of investment vehicles, including superannuation funds. Superannuation funds should be able to invest in the Scheme without breaching the requirements governing superannuation funds. However, the investment strategy and prudential requirements of an individual superannuation fund will need to be considered in determining whether a particular superannuation fund can invest in the Scheme.

Q. How can you offer such a high return?

A. Our management fees are kept to a minimum and we do not have the large overheads or ongoing costs of larger financial institutions. These savings are passed onto investors.

Q. Why would a borrower pay such high interest rates?

A. The fees and charges paid by our borrowers are competitive with this industry. Because we are flexible and have a greater understanding of the development industry, our loan approval process is quicker than the major banks and each loan facility is structured to suit the needs of the borrower rather than the lender. Many of our borrowers have dealt with us in the past and find our service levels equal or better than our competitors.

Q. Who provides the valuations to Guardian?

A. Guardian has a panel of valuers carefully selected for their knowledge and expertise in the property development industry. Each approved valuer must be a member of the Australian Property Institute and hold Professional Indemnity insurance.

Q. What is Guardian’s role?

A. Guardian is responsible for the initial research and sourcing of all loans and the ongoing administration of these loans through to repayment of principal and interest by the borrower. Guardian is also responsible for ensuring that the Scheme complies with all of the regulatory issues set down in the Corporations Act, the Scheme’s Constitution and Compliance Plan.

Q. Are there any entry or exit fees for Investors?

A. No. Your Investment is not affected by any entry or exit fees. Guardian will receive interest income and fees from the borrower as described in this PDS and the SPDS. The borrower, and not the Investor, is responsible for all costs and fees associated with the establishment of a loan.

Q. What is the minimum Investment?

A. The minimum Investment is $10,000 and thereafter in multiples of $5,000. Guardian Securities reserves the right to accept Applications of less than $10,000 at its discretion.

Q. What returns can I expect and when can I expect to receive them?

A. We expect that Investors will receive returns of between 9-15% per annum from a mortgage investment. Full details will be provided in the Supplementary PDS applicable to each mortgage investment. Generally interest payments will be monthly or quarterly in arrears but can also include a bonus payment upon completion and sale of the project.

Q. Do you lend on second mortgages?

A. We may offer investors the opportunity to invest in a second mortgage facility carefully selected and approved by the directors of Guardian. Interest rates payable to investors is generally around 15% and full details of such offers will be disclosed in the SPDS.


Q. Do you lend to associated companies of Guardian?

A. All existing Guardian loans are to third party borrowers who are well known to the directors of Guardian and have a proven track record in development finance. Each loan is secured by a registered mortgage plus directors guarantees and where applicable fixed and floating charges over the borrower.

Q. Have there been any defaults in the past?

A. As Master Mortgage Fund No. 6 has not been operating for any period of time, there is no default history to date. Previous schemes issued and promoted by Guardian have returned all investor funds in full in accordance with the particular offer document.

Q. How long is my investment committed?

A. The length of time for which your Investment will be committed to a particular Mortgage Investment will be specified in the applicable Supplementary PDS. Guardian expects that Mortgage Investments will normally have a term of approximately 6 - 12 months.

Q. Can I sell my investment?

A. There is no established secondary market (e.g. stock exchange) for this type of investment. You should treat your Investment in a Mortgage Investment as illiquid and being in place for the full term of that Mortgage Investment.

Q. What is my liability as an Investor?

A. Each contributory mortgage is structured so that your liability as an Investor is limited to your Investment in that mortgage. You will have no financial or other commitment beyond your Investment.

Guardian Securities recommends that you read the PDS and any Supplementary PDS prior to investing. If necessary seek independent legal or financial advice if you have any questions relating to this type of investment.