Definition
What is First Mortgage?
A loan secured by first-ranking security over property, giving the lender priority claim in default.
A first mortgage (also called senior secured lending) is a loan where the lender has first claim on the property if the borrower defaults. This priority position provides significant protection for investors in mortgage funds.
Key Characteristics: - First in line to recover funds if borrower defaults - Priority over all other creditors secured by the same property - Typical LVRs of 60-70% provide equity buffer - Target returns vary by fund and risk profile (review each fund's disclosure documents) - Regular income from interest payments
Why First Mortgage is Considered Lower Risk: - Priority claim means higher recovery rates - Property security provides tangible backing - Conservative LVRs create buffer against value declines - Registered mortgages are legally enforceable
Risks to Consider: - Property values can decline - Borrower default still possible - Recovery takes time and has costs - Interest rate changes affect borrower ability to pay - Concentration in specific regions or property types
Related Investment Opportunities
Blossum Wholesale Fund
Blossum
8%-8% target
Midlands Income Wholesale Fund
Midlands Funds Management
Finbase Direct Lending Opportunities
Finbase
8%-8.5% target
Obsidian Contributory Mortgage Scheme
Obsidian Group
4.8%-7.71% target
Squirrel Wholesale Construction Loan Fund
Squirrel
Squirrel Specialised Income Fund
Squirrel
9%+ target
Related Terms
LVR (Loan-to-Value Ratio)
The ratio of a loan to the value of the asset securing it, used to assess lending risk.
Mezzanine Debt
Subordinated debt ranking behind senior debt but ahead of equity — higher returns (typically 10-15%) compensating for higher risk and weaker security.
Private Credit
Non-bank lending to businesses and property developers, offering regular income and typically secured positions.
Learn More
Explore this with AI
Open an AI assistant with a prompt pointing at this Wholesale Investor guide — it can read the page and our structured data.
Key takeaways
Why it matters
Action plan
What to check before investing
Educational Content Disclaimer
This glossary provides general educational information only and does not constitute financial, legal, or tax advice. Definitions and explanations are simplified for educational purposes and may not cover all aspects or nuances of each term.
Before making any investment decision, you should seek independent advice from appropriately qualified professionals. Wholesale Investor does not recommend or endorse any particular investment, strategy, or fund manager.