There are many ways to save for a home that don’t require major changes to your lifestyle and one particular method is leveraging an investment vehicle to get the money you’ve already saved working harder for you. However first, you need to set your savings target!
Your savings target for your deposit should be the difference between the mortgage amount you can afford and the amount you wish to spend on your home. If you’re having trouble working out an affordable mortgage, the Australian Securities and Investments Commission (ASIC) have a great calculator on their MoneySmart website.
With this figure in mind, there are a number of investments that deliver an income that may accelerate your savings potential. According to ASIC, investing your savings into a managed fund may be appropriate if you are planning to buy your new home in a few years’ time due to their suitability toward longer investment terms.
An alternative to a managed fund, could be an unlisted Mortgage Trust investment, such as the Trilogy Monthly Income Trust by Trilogy Funds. A Mortgage Trust is an investment that is operated by a responsible entity and the money that is invested within the Trust is lent out as mortgage loans to borrowers undertaking property development, construction, or land subdivision projects. The interest received by the responsible entity on the loans is then used to pay you a yield which is commonly referred to as a ‘Distribution’. The yield on distributions changes from fund to fund.
The Trilogy Monthly Income Trust by Trilogy Funds is a pooled mortgage investment with underlying investments consisting of cash products, such as cash deposits or term deposits and, loans secured by registered first mortgages. Utilising lending criteria, Trilogy Funds will determine which loans are suitable for investing. A policy for loan diversification is used to ensure risks are not concentrated with one particular borrower or group of borrowers, in one particular geographic area or one type of property.