For investors, the choice between a first and a second mortgage position comes down to your appetite for risk and return. Here is how they compare.
First mortgage positions
A first mortgage holds first claim on the property, ahead of all other charges. This makes it the more conservative position, with a target of approximately 7–8% annual interest.
Second mortgage positions
A second mortgage ranks behind the first and therefore carries more risk, but it targets higher returns of approximately 9–11%. It suits investors comfortable trading additional risk for greater yield.
Balancing risk and return
Many investors hold a mix of positions to balance steadier income with higher-yield opportunities. The right blend depends on your goals and risk tolerance.
How both are secured
In both cases your investment is secured by a registered mortgage charge against real estate. Targets are estimates, not guarantees, and all investments carry risk.
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This article is for general information only and is not financial, legal, or investment advice. Please consult a qualified, licensed professional before making any decision.