While record low interest rates may be great for home buyers, there's not a lot of joy for self-funded retirees! But one private lender has a solution.
Whilst RBA Governor Glenn Stevens, and First Home Buyers, may be pleased with the results of lowering Australia's interest rate to an all-time low, not all sectors of society feel the same. For self-funded retirees, it's best described as a disaster!
Lower interest rates require larger amounts of assets to generate income, so the pressure is on the find investment opportunities that offer better returns. And that's no easy feat, given the relative instability of the share market.
However, there is one idiom that still rings true: property is the best investment. And that doesn't have to mean your own property!
New Investment Opportunities: Rise in Private Lenders
With the interest rate so low, and the banks tightening up their lending criteria, we are seeing private loan lenders taking the lead in Australia. They are not only funding major developments - something the banks seem loathe to do - but, in doing so, they are also generating some excellent investment opportunities.
Let's take Credit Connect Capital as an example. Through its Credit Connect Select Fund, the company is helping borrowers fund important projects while, at the same time, private lenders are providing investors in Australia with access to new mortgage investment opportunities.
Smart Money at Work
It's forward-thinking and dynamic, and is exactly where Australia needs to be moving forward.
The way it works is so simple. Credit Connect Capital offers construction and development loans, and commercial loans, from $50,000 to $50,000,000, for 1-4 year terms, with an LVR around 60-65%.
The borrower's loan rate is from 8%, which generates a healthy ROI for the investor. Here's an example. An experienced development company required First Mortgage funding of $20,000,000 towards purchasing a property in North Melbourne.
The company was successful in securing the loan from Credit Connect Capital, for a term of 12 months, and an LVR of 64.51%. The property value was $30,900,000.
Earn From 6% on your Investment
The property holds a development permit for Mixed Use, and will a Woolworths Supermarket, BWS Bottleshop, other stores and offices, plus a residential component of 299 apartments. By funding this loan, Credit Connect Capital was able to offer its investors an outstanding opportunity to earn 10% pa on their money.
With term deposits offering, at best, 3%, that is clearly a very attractive investment!
The investor benefits of going through a company such as Credit Connect Capital are huge. Firstly, it offers a diverse range of investment opportunities. And Credit Connect Capital loans are secured via a Registered Mortgage against the borrower's real property.
Great Opportunity for Retirees
Clients can invest from as little as $5000, over 1-4 years, with payments made monthly, directly into their bank accounts. The returns are fixed for the term of each mortgage, and all costs associated with the mortgage are paid by the borrower.
Sounds good, doesn't it? And it sounds like something that would spark a sigh of relief from most self-funded retirees. As we live longer, it's important that we have the funds to do so comfortably. And while interest rates are so low, traditional investments just won't cut it.