Mortgage Funds Australia: How They Work, Risks and Withdrawals
Registered mortgage schemes · Structure, risk and liquidity · Factual explainer
A mortgage fund is a lender that has been funded by investors, and almost everything people get wrong about it follows from missing that one fact. This guide answers the investor's question factually and without recommending anything: what a mortgage fund actually is, how the money reaches a borrower, who holds the mortgage, who is legally accountable, what the Australian failure record shows, what an SMSF trustee has to weigh, and why the regulator says this is not a term deposit. If you are a borrower wanting to know where the money for your loan comes from, that is a different question and it is answered elsewhere on this site.
Quick Answer
A mortgage fund is a registered managed investment scheme that pools money from investors and lends it to property borrowers against mortgage security. Investors hold units in the scheme rather than any individual loan, and the responsible entity, not the investor, selects and manages the lending.
This guide explains how mortgage funds work in Australia. It is general information, not financial product advice, and it does not recommend any fund or investment.
Also called: mortgage scheme, mortgage trust, pooled mortgage fund, contributory (or select) mortgage fund.
| Question | Short answer |
|---|---|
| What is it? | A managed investment scheme that pools investor money and lends it to property borrowers against mortgage security. |
| What do you own? | Units in the scheme, not the mortgages. |
| Who runs it? | A responsible entity: a public company holding an Australian financial services licence. |
| Who holds the assets? | The responsible entity, on trust for members and separately from its own property. Many schemes also use a custodian or security trustee. |
| Who regulates it? | ASIC, under the Corporations Act. APRA does not regulate mortgage funds. |
| Is there a government guarantee? | No. The Financial Claims Scheme covers deposits at APRA-licensed institutions, not units in a scheme. |
| How fast can you get out? | Under the constitution while the scheme is liquid. Once it is illiquid, only through a withdrawal offer, and ASIC warns the wait can be 12 months. |
| What is this page not? | Not advice, not a comparison of named funds, and it carries no return, yield or distribution figures. |
What is a mortgage fund in Australia?
A mortgage fund is a registered managed investment scheme that pools money from many investors and lends it to property borrowers, secured by a mortgage over real property. Where it is offered to retail investors it is a registered managed investment scheme under Chapter 5C of the Corporations Act 2001, operated by a responsible entity that holds an Australian financial services licence. ASIC's own term for the product is a mortgage scheme, and its guidance is written for unlisted schemes, meaning units are not traded on an exchange.
The vocabulary is unusually loose, which is part of why the topic is confusing. The same structure is described as a mortgage fund, a mortgage trust, a mortgage scheme, a private credit fund or a mortgage investment fund, depending on who is writing. The label does not change the legal position. What changes the legal position is whether the scheme is registered, who the responsible entity is, and what the constitution and disclosure documents say.
Pooled or contributory: what is the difference?
Two structural variants exist and the difference decides what you are exposed to. In a pooled scheme your money sits in a pool spread across many loans, and the responsible entity selects and allocates those loans; your exposure is to the pool, and you have no say over any one of them. In a contributory scheme, sometimes called a select scheme, your money is matched to identified loans, so your exposure is loan-specific rather than spread. That is the structural difference and it is where this page stops. How a contributory scheme allocates loans, what say an investor has over a specific loan, and how liquidity works inside one are covered in how contributory schemes allocate loans.
One thing to hold onto before anything else on this page makes sense. A mortgage fund is a lender that has been funded by investors. Everything that follows, the accountability, the liquidity, the failure modes, follows from that single fact: the money has to be lent before it can earn anything, and lent money is not available on demand.
How does the money get from an investor to a borrower?
Your money buys units in the scheme, and the scheme, not you, makes the loan. That is the whole mechanism in one sentence, and the six steps below are worth naming only because most descriptions collapse them and lose the part that matters, which is that you never own a mortgage.
- You apply under the scheme's disclosure document and your application money is accepted into the scheme.
- You are issued units. From that moment you hold units in the scheme, not an interest in any mortgage.
- Your money joins the scheme's assets, which the responsible entity holds on trust for members.
- The responsible entity assesses a loan against the scheme's mandate and advances it to a property borrower.
- Security is taken. In most cases that is a registered mortgage over real property, often supported by guarantees and other security.
- The borrower pays interest. It flows to the scheme, the manager's fees and the scheme's costs come out, and what remains is available for distribution to unitholders under the constitution.
Run it in reverse and you have the exit. When a borrower repays or refinances, the capital returns to the pool, and it either funds the next loan or funds withdrawals. That is the entire machine. It is the same machine that sits behind private lending generally, viewed from the funding end rather than the borrowing end. The borrower's version of this question, where the money for a private loan actually comes from, is answered in detail in where the money for these loans comes from.
A commercial borrower needs finance against a property they already own. The responsible entity assesses the loan against the scheme's mandate, approves it, and advances the money from the pool. A first mortgage is registered over the property in favour of the scheme's custodian or security trustee. The borrower makes monthly interest payments, which flow back into the scheme. If the borrower stops paying, the interest stops flowing on that loan, the fund's income from it falls to nothing, and the scheme's route to getting the capital back is enforcement of the mortgage rather than a claim on anybody's balance sheet. Nothing in that sequence is unusual, and nothing in it is guaranteed. Illustrative only; it describes a mechanism, not an outcome.
Who actually holds the mortgage?
The responsible entity holds legal title to the scheme's assets, and in many schemes the registered mortgage itself is held by a separate security trustee rather than by the manager in its own name. The Corporations Act is explicit: under section 601FC(2), "The responsible entity holds scheme property on trust for scheme members." Section 601FC(1)(i) goes further and requires the responsible entity to ensure that scheme property is "clearly identified as scheme property" and "held separately from property of the responsible entity and property of any other scheme". A third duty in the same section, s 601FC(1)(j), requires the responsible entity to "ensure that the scheme property is valued at regular intervals appropriate to the nature of the property", and s 601FC(5) makes a contravention of s 601FC(1) a civil penalty provision. Valuation is dealt with in its own section below.
In practice the separation is often reinforced by two more parties. A custodian holds the scheme's assets, separately from the responsible entity's own assets, and acts only on the responsible entity's proper instruction. A security trustee holds the registered mortgages themselves, so the security over a borrower's property sits with a trustee for the benefit of members. Not every scheme uses both, and the disclosure documents are where you find out which applies. Where first mortgage security is taken, the title record will name the entity that holds it.
Can the fund manager touch your money?
Not lawfully, and that is exactly what the separation is for. Scheme property must be kept clearly identified and held apart from the manager's own property and from any other scheme it runs, so the scheme's assets are not available to the responsible entity's own creditors if it fails. What that protection does not do is make the loans good, the valuations right, or your capital safe. Segregation protects assets from the manager. It does not protect their value, and the two get run together constantly.
| Role or structure | What it holds | What it may do with it | What protects you if it fails |
|---|---|---|---|
| Responsible entity | Legal title to scheme property, on trust for members | Operate the scheme within its constitution and compliance plan | Scheme property is held on trust and kept separate from the entity's own assets, and the responsible entity can be replaced without the scheme ending |
| Custodian | Scheme assets, held separately from the responsible entity's own assets | Hold only, and act on the responsible entity's proper instruction | The separation is the protection: what the custodian holds is not the manager's balance sheet |
| Security trustee | The registered mortgage over the borrower's property | Enforce the security on default, for the benefit of members | The security sits with the trustee rather than with the manager personally |
| Unitholder | Units in the scheme, not the mortgages | Nothing directly; rights run through the constitution | Rights are contractual and statutory, exercised through the responsible entity rather than over any one loan |
| Pooled scheme | Your money sits in a pool across many loans | The responsible entity selects and allocates the loans | Exposure is spread across the pool, and you have no say over any individual loan |
| Contributory scheme | Your money is matched to identified loans | Investors are allocated to specific loans | Exposure is loan-specific rather than spread. The mechanics belong to the contributory guide linked above |
Who is legally responsible for a mortgage fund?
The responsible entity is legally responsible for a registered mortgage fund: a public company that holds an Australian financial services licence and answers for the operation of the scheme whether or not it performs the day-to-day work itself. That is a narrower answer than it sounds. Compare it with the way people usually describe a fund, as the "manager", the "sponsor" or the "group". Legally there is one accountable party, and outsourcing the loan origination, the servicing or the custody does not move the accountability.
It is worth understanding why the licence matters and what it is not. ASIC states the position plainly: "To engage in credit activities and provide financial services, you must hold two separate licences: a credit licence and an AFS licence." Lending money is a credit activity. Offering people units in a registered scheme is a financial service. They are different authorisations, and a business that holds one does not thereby hold the other. That distinction is also why a page like this one can explain how the structure works but cannot tell you whether to invest in it.
ASIC also runs a disclosure regime over this product. Its Regulatory Guide 45, reissued in March 2026, states that ASIC has "developed eight benchmarks and eight disclosure principles that apply to all unlisted mortgage schemes in which retail investors invest", reported against on an "if not, why not" basis. Working through what those items ask, and what a weak answer to one of them looks like, is a due diligence exercise in its own right and is covered in what those disclosure tests actually ask. The single point that belongs here is that this is a disclosure regime, not a safety rating: a scheme can report against all of it and still lose money.
What happens if the responsible entity fails?
The scheme does not automatically die with it. Scheme property is held on trust and kept separate, as section 601FC requires, and the Act contains machinery for a replacement. Under section 601FT, on a change of responsible entity a document to which the former entity was a party "has effect as if the new responsible entity (and not the former responsible entity) were a party to it". Section 601FS deals with the other half of the same transfer, the rights, obligations and liabilities that follow the change. In other words the scheme is designed to survive its manager. What it is not designed to do is restore value that has already been lost inside the loan book, and conflating those two is the most common error investors make when they read about segregation. Where the responsible entity provides financial services to retail clients it must also be a member of the Australian Financial Complaints Authority, which gives members an external complaints pathway that a purely commercial lender would not have.
The regulators' own market figures, and what each one is measuring
- $200bnis APRA's estimate of private credit in Australia, which it puts at roughly 3 per cent of the size of the banking system. The qualifier: the denominator is the banking system, and other published sizings use different denominators and are not interchangeable with this one. APRA, System Risk Outlook, 21 May 2026.
- 28 fundswere reviewed in ASIC's private credit surveillance from October 2024 to August 2025. The qualifier: this is a surveillance sample chosen by the regulator, not a census of the market, and nothing in it should be read as a market-wide proportion. ASIC, REP 820, 5 November 2025.
- ~$2,000is how low retail investment thresholds now go, in ASIC's words, with platforms including superannuation "enabling participation in inherently less transparent and in some case more complex products". The qualifier: the low threshold and the transparency warning are one statement and are not separable. ASIC, Key issues outlook 2026, 27 January 2026.
- 3stop orders were issued in 2025 against retail credit and mortgage funds, which ASIC pointed to in its June 2026 statement on the sector. The qualifier: a stop order halts offers pending remediation and is not a finding that investors have lost money. ASIC, 25-206MR, 25-208MR and 25-240MR, cited in the news item of 18 June 2026.
General information only, not financial product advice and not a recommendation. These are regulator and market-context figures with their scope attached; none of them is a return, a rate or a performance measure, and none of them describes any particular fund. Every fund's own position is set out in the product disclosure statement and its updates.
How are the loans and the properties behind them actually valued?
Valuation is a statutory duty of the responsible entity, not a courtesy to investors. Section 601FC(1)(j) of the Corporations Act requires it to ensure that scheme property is valued at regular intervals appropriate to the nature of the property, and s 601FC(5) makes a contravention of s 601FC(1) a civil penalty provision. What the Act does not do is set the interval or name the valuer, which is why the answer to how often varies between schemes and why the scheme's own documents decide it.
ASIC has said what it expects the practice to look like. In its guidance on reliable managed fund valuations it states that responsible entities should ensure scheme property is valued at regular intervals appropriate to the nature of the property, and that valuations are carried out by unbiased valuers who are periodically rotated by the responsible entity. It also says it may take regulatory action against responsible entities that do not comply with their obligations to provide fair and reasonable valuations of fund assets. The rotation point is the one worth holding: a valuer used repeatedly on the same book is a governance question, not a technical one.
Its review of how managed funds valued illiquid assets covered mortgage funds specifically and set out what good looked like: segregation of roles, the involvement of independent committees, and multi-level review of internal and external valuations to support the accuracy of valuations and a robust conflicts framework. A scheme's constitution is also required to set out how scheme property is valued, so the mechanism is a document you can read rather than a matter of trust.
Why does the unit price never seem to move?
Because a unit price in an unlisted scheme is not a market price. There is no exchange setting it. It is calculated from the scheme's own valuation of its assets, so it moves when the responsible entity revalues, not when the property market does, and ASIC maintains a separate guide on unit pricing practice, Regulatory Guide 94 (RG 94), for exactly that reason.
The second half of the answer is the loan book rather than the property. Where a scheme's loans are financial assets subject to the impairment requirements, the accounting standard AASB 9 requires a loss allowance for expected credit losses, and it carries a rebuttable presumption that credit risk has increased significantly where contractual payments are more than 30 days past due. The practical effect is that a shortfall shows up when the fund recognises it, which is a judgement made inside the scheme, and not at the moment a borrower first goes quiet.
That is precisely what the regulator has been warning about. In June 2026 ASIC said that inconsistent definitions for arrears, impairment, loan amendments and provisioning "are reducing comparability across funds". Read alongside its warning that weaker borrower conditions are increasing the risk that reported valuations do not fully reflect underlying economic conditions, the point is not that a stable unit price is dishonest. It is that a stable unit price is an output of the scheme's own valuation and provisioning policy, and two schemes reporting the same number may not be measuring the same thing.
What has actually gone wrong with mortgage funds in Australia?
Australian mortgage funds have failed the same way repeatedly: loans written against valuations struck in better conditions, borrowers slowing down or stopping, assets that can no longer be sold quickly at the values on the books, and withdrawals frozen as a result. After the global financial crisis a large number of mortgage and property funds froze redemptions, and ASIC set up a specific process to deal with hardship withdrawals from frozen funds. Several well-known mortgage and property trusts of that era did not survive at all. No fund is named on this page, deliberately, because the useful thing is not the roll-call. It is the pattern, and the pattern repeats.
Follow the sequence and you can see why it repeats. Investors who understood their money to be available at short notice discover that it is not, and the eventual recovery depends on what the security realises rather than on what the unit price said. Every element of that sequence is a liquidity and valuation problem before it is a fraud problem, which is why the regulator's attention keeps landing on those two things rather than on misconduct.
It landed there again in 2026. In a statement issued on 18 June 2026, ASIC said that "Tighter liquidity, emerging borrower stress and signs of credit deterioration are testing valuations, governance and investor disclosures", and that credit deterioration "is emerging unevenly with pockets of higher defaults, impairments, and loan amendments". The same statement carries the qualifier that belongs with it: "Redemption requests remain contained in aggregate, with higher activity observed in some feeder funds investing in global private credit." ASIC also noted that inconsistent definitions for arrears, impairment, loan amendments and provisioning "are reducing comparability across funds", which is a polite way of saying that two funds reporting the same arrears number may not be reporting the same thing.
The underlying surveillance is worth reading in its own terms. ASIC's report of 5 November 2025 records that "From October 2024 to August 2025, ASIC conducted a surveillance reviewing 28 private credit funds", made up of "20 registered private credit funds (retail funds) with AUM totalling $26.6 billion" and "eight private credit funds available to wholesale clients only as non-registered funds (wholesale funds) with assets under management (AUM) totalling approximately $3 billion". 28 funds is a regulator's sample, not a census, and the figures should be read that way. The single most quotable finding is about transparency rather than performance: only 4 of the 28 funds published information about the interest rates or ranges charged to borrowers. If a fund does not disclose what it charges the people it lends to, an investor cannot see where the income is coming from or what risk is being priced.
ASIC has also acted on distribution here: it pointed in June 2026 to 3 stop orders issued during 2025 against retail credit and mortgage funds, under media releases 25-206MR, 25-208MR and 25-240MR. A stop order halts offers until the identified problems are fixed. It is not a finding that investors have lost money, and the funds involved are not named here. What it does tell you is that the design and distribution obligations are being enforced in this specific corner of the market.
The table below is the part of this page most worth keeping. It sets out the four ways these funds actually fail, what governs each one, and what protection does and does not apply. The same four questions, asked of a scheme in advance rather than in hindsight, are worked through in how these funds are assessed; note that a wholesale fund typically offers an information memorandum rather than a registered product disclosure statement, which is a different disclosure standard.
| Failure mode | What actually happens | The governing mechanism | What protection applies, and what does not |
|---|---|---|---|
| A borrower stops paying | The loan goes into default and interest stops flowing to the pool. Income from that loan falls to nothing while the capital is still outstanding | State mortgage legislation and the power of sale; the Corporations Act duty on a controller as to sale price | The mortgage is enforced and the property sold. No compensation scheme applies. Recovery depends on what the security realises, not on any guarantee |
| The manager fails or becomes insolvent | The responsible entity can no longer operate the scheme | Corporations Act s 601FC (scheme property on trust and held separately) and s 601FT (replacing the responsible entity) | Scheme property is separate from the manager's own assets and the manager can be replaced without ending the scheme. This is real, and it is routinely mistaken for cover against loss. It is not |
| The scheme becomes non-liquid and withdrawals freeze | Members can no longer withdraw at call, and exit depends on the manager making an offer | Corporations Act ss 601KA and 601KB (members' rights to withdraw, and non-liquid schemes), and the 80% liquidity test as ASIC describes it | Exit becomes available only through a withdrawal offer. ASIC warns the wait can be as long as 12 months. Nothing accelerates it |
| A valuation proves optimistic | Recovery on enforcement falls short of the loan balance, and the shortfall lands on the pool | The RG 45 disclosure regime, reported on an "if not, why not" basis | Disclosure is the protection, not a guarantee. In June 2026 ASIC said that "weaker borrower conditions are increasing the risk that reported valuations do not fully reflect underlying economic conditions" |
Where do the returns come from?
Returns come from the interest borrowers pay on the money they have drawn, net of the manager's fees and the scheme's costs, and not from property prices rising. That is the reframe worth making early, because a mortgage fund is often filed mentally alongside property investment, and mechanically it is the opposite. A mortgage fund is a lender. It does not own the property and it does not participate in the upside if the property appreciates.
The mechanism is short enough to state in full. Borrowers pay interest, and in many cases fees, on the money they have drawn. Those payments flow into the scheme. Out of them come the manager's fees, the costs of running the scheme, and any expenses of holding or recovering the loans. What is left is available for distribution to unitholders, in the manner and at the intervals the constitution sets. That is the entire income engine, and it has one dependency: borrowers actually paying. When a borrower stops, the income from that loan stops immediately, while the capital stays outstanding until the security is realised.
What erodes what actually reaches an investor?
Four things, and they are worth separating because they behave differently. Defaults remove income first and threaten capital second. Fees apply at more than one level in some structures, and a fee charged to the borrower is not the same as a fee charged to the scheme, which is why disclosure of both matters. Optimistic valuations at origination do not show up as a cost at all until enforcement, at which point they show up as a shortfall; the ratio of the loan to the value of the security, the loan to value ratio, is the number that describes how much room there was to be wrong. And uninvested cash earns little, so money sitting in the scheme waiting for a loan to fund is a drag on what the scheme as a whole produces.
Where do the fees actually show up?
In the disclosure document, under a regime ASIC writes separately. Its guide on disclosing fees and costs, Regulatory Guide 97, governs how fees and costs are set out in product disclosure statements and in the periodic statements a member receives afterwards. A headline rate quoted in marketing is not the same document and is not subject to the same discipline, which is why the fee question is answered by reading the statement rather than the brochure.
The regulator's own framing of the wider trend is worth carrying into any reading of a scheme's disclosure documents. ASIC has described these as "inherently less transparent and in some case more complex" products. Less transparent means the income mechanism above is often harder to trace in practice than it is to describe in principle. That is why a scheme's disclosure documents repay close reading, and it is the only conclusion this page draws.
What happens when you want your money out?
While a scheme is liquid, you may withdraw in accordance with its constitution. Once 80% of its assets can no longer be sold at market value in a reasonable period the scheme is not liquid, and from that point you can withdraw only in accordance with a withdrawal offer that the responsible entity chooses to make. Two words describe the same state: the Corporations Act calls it a scheme that is not liquid, written in the headings as non-liquid, while ASIC's consumer material calls it illiquid. They mean the same thing and both are used below. ASIC describes the trigger plainly: "Sometimes, a scheme may become illiquid, which means that 80% of its assets can no longer be sold at market value in a reasonable period." Under sections 601KA and 601KB, members of a non-liquid scheme can withdraw only under such an offer, and the responsible entity decides whether to make one and when. A separate hardship pathway exists, and ASIC is explicit that a responsible entity "is not obliged to offer hardship withdrawals or grant a hardship withdrawal requested by a member".
How long can that last? ASIC's own warning is the one to hold: "Even if a mortgage scheme says that you can take your money out at short notice, you might have to wait for as long as 12 months to get it back." Note what that says. It is not describing a scheme that misled anybody. It is describing what can happen to a scheme whose documents say short notice, because the underlying assets are mortgages with terms of their own and cannot be turned into cash on demand.
| Number | What it governs | Where it comes from |
|---|---|---|
| 80% | The liquidity test. A scheme stops being liquid once 80% of its assets can no longer be sold at market value in a reasonable period, and withdrawals then run through a withdrawal offer instead of the constitution | Corporations Act, in the wording ASIC uses to describe it |
| 12 months | How long ASIC warns you might wait to get money back, even from a scheme whose documents say you can withdraw at short notice | ASIC MoneySmart, investing in mortgage schemes |
| $250,000 | The Financial Claims Scheme cap, for each account holder at each APRA-licensed institution incorporated in Australia. It applies to deposits and does not reach units in a mortgage scheme | APRA deposit checker |
| 31 days | The notice institutions require to break a term deposit, which is the honest comparison point rather than instant access | ASIC, on 31-day notice term deposits |
How does that compare with a term deposit?
The regulator has gone out of its way to say the comparison does not hold. ASIC's consumer material on mortgage schemes states it directly: "Investing in unlisted mortgage schemes is riskier than term deposits offered by banks, building societies and credit unions that are prudentially regulated in Australia". That sentence is doing two jobs. It is about risk to capital, and it is about who is prudentially regulated, which is a different question from who is regulated at all.
On the other side of the comparison, the protection is specific. APRA's deposit checker states that deposits are protected up to $250,000 for each account holder at each licensed bank, building society or credit union incorporated in Australia, and that the Financial Claims Scheme does not apply to "finance companies and other financial institutions that are not licensed (authorised) by APRA". Separately, the Banking Act 1959 gives Australian depositors a priority over an Australian bank's assets in Australia: those assets go first to recovering Financial Claims Scheme payouts and the scheme's costs, then to deposits above the cap, and only then to other unsecured creditors. Neither of those mechanisms reaches a mortgage scheme, and the scheme's own disclosure documents are where its withdrawal terms actually live.
One qualification, because a comparison that flatters one side is not a factual comparison. A term deposit is not instantly accessible either. ASIC has noted that authorised deposit-taking institutions "require customers to provide 31 days' notice before breaking a term deposit to help with liquidity management or to assist in meeting the Australian Prudential Regulation Authority's prudential liquidity standards for the liquidity coverage ratio under Prudential Standard APS 210 Liquidity". The honest contrast is not access versus no access. It is a notice period set by the institution's terms against a suspension driven by whether the underlying assets can be sold.
| Feature | Term deposit with an APRA-licensed institution | Unlisted mortgage scheme |
|---|---|---|
| What you hold | A deposit with the institution | Units in a registered managed investment scheme |
| Government protection of the amount | Financial Claims Scheme, up to $250,000 for each account holder at each licensed institution incorporated in Australia | None. The Financial Claims Scheme does not cover institutions APRA has not licensed |
| Priority if the institution fails | The Banking Act 1959 applies an Australian bank's Australian assets to depositors ahead of other unsecured creditors | Rights run through the scheme constitution and the responsible entity's statutory duties |
| Getting out early | Subject to the institution's terms, and commonly 31 days' notice to break the deposit | Only in accordance with the constitution while the scheme is liquid. Once illiquid, only through a withdrawal offer the manager chooses to make |
| How long that can take | The notice period under the terms | ASIC warns you might have to wait as long as 12 months |
| What the regulator says about the comparison | Not applicable | ASIC: investing in unlisted mortgage schemes is riskier than term deposits at prudentially regulated institutions |
What this means inside a self-managed super fund
Liquidity is a documented obligation for an SMSF trustee, not just a preference, which is why this asset class deserves particular attention inside a fund. The ATO's guidance on creating an SMSF investment strategy requires investments to be permitted by the trust deed and superannuation laws, to show clear legal ownership by the fund, to be made on a commercial arm's length basis at true market value, and to meet the sole purpose test. It also says the strategy itself must consider the "liquidity of the fund's assets (how easily they can be converted to cash to meet fund expenses and pay member benefits)".
Read that alongside the 80% test above and the intersection is obvious. An asset that can stop being convertible to cash sits directly against the factor the strategy is required to address, and the ATO lists the start of a pension as a review trigger precisely "because you need to ensure the fund can meet minimum pension payments". None of that makes a mortgage scheme an unsuitable SMSF asset, and nothing on this page says it is. It makes the liquidity question a documented one, for the trustees, their accountant and auditor, and a licensed financial adviser rather than a broker.
Access rules are different again for wholesale funds, which are not registered and are open only to investors who meet the statutory tests. Whether you meet the sophisticated investor definition is a technical question with its own certification machinery, and it is covered in the wholesale investor tests. It is not the same question as whether a fund is any good, and the two get run together constantly, including by people who should know better. It is also worth separating mortgage schemes from non-bank lenders generally, which is the subject of the next section.
What can you do if a mortgage fund has already frozen your money?
Four things: apply for a hardship withdrawal, ask whether a withdrawal offer has been made, complain to the responsible entity and then to AFCA, and use the rights the Corporations Act gives members over the scheme itself. None of them is waiting. The first step underneath all four is to establish which mechanism you are actually in, because a suspension under the scheme's constitution and a scheme that has become non-liquid are different situations with different rights: in the second, the Corporations Act, not the fund's discretion alone, governs how withdrawals happen, and members can withdraw only in accordance with a withdrawal offer. Ask the responsible entity for the basis of the freeze in writing. Then: you can ask whether it offers hardship withdrawals and apply if you meet one of ASIC's criteria; you can ask whether a withdrawal offer has been made or is planned; you can complain, first through the responsible entity's internal dispute resolution process and then to the Australian Financial Complaints Authority at no cost; and members acting together have statutory rights over the scheme itself.
Start with what a freeze does and does not mean, because the assumption is usually worse than the position. ASIC's information sheet on frozen funds and hardship withdrawals, INFO 159, says that freezing a scheme is often a prudent measure to protect the interests of all members and that it "does not necessarily mean that the value of investments has decreased, members' money has been lost or that distributions, such as income payments, have stopped". A freeze can prevent assets being sold below market value to meet withdrawal requests, which is how all members end up treated fairly rather than the quickest ones getting paid. Responsible entities must notify members if their scheme is frozen. ASIC also notes elsewhere that a responsible entity is required by the Corporations Act to freeze redemptions if the scheme ceases to be liquid, so a suspension is not always a discretionary act.
How does a hardship withdrawal work?
It runs on ASIC relief rather than on the constitution, and it is discretionary at the manager's end. A responsible entity that intends to allow hardship withdrawals must notify ASIC, and the schemes that have done so are listed in the appendices to ASIC's companion sheet for responsible entities of frozen funds, INFO 249. That list is public and is the first thing to check. The relief itself sits in ASIC Instrument 2020/778 and works by lifting the duty in s 601FC(1)(d) to treat members holding interests of the same class equally, which is the reason a scheme cannot simply pay one member ahead of another without it.
You apply to the responsible entity and demonstrate that you meet one of four criteria. ASIC is explicit that it "does not determine who meets the hardship criteria nor issue hardship withdrawals from frozen funds" and that it does not give legal advice, and equally explicit that a responsible entity "is not obliged to offer hardship withdrawals or grant a hardship withdrawal requested by a member".
| Ground or limit | What ASIC's information sheet says |
|---|---|
| Urgent financial hardship | Where you are unable to meet reasonable and immediate living expenses for yourself or your dependants |
| Unemployment | Where you have not been employed for at least three months and have no other means of financial support, except government assistance |
| Compassionate grounds | A defined list covering medical costs for a life-threatening illness or injury or to alleviate acute or chronic pain or mental disturbance, modifications to a home or vehicle for a severe disability, funeral and death-related expenses, care for a person dying from a terminal illness, preventing a lender from selling your principal place of residence, and meeting certain binding financial obligations |
| Permanent incapacity | Where you are no longer employed due to mental or physical illness and are unlikely to recommence that employment |
| How much | Members who meet the criteria may, subject to the responsible entity's discretion, withdraw up to a total of $100,000 per calendar year |
| How many times | Up to four hardship withdrawals per calendar year, again subject to that discretion |
| Who decides | The responsible entity determines who meets the criteria and how much each investor can withdraw. ASIC does not decide and does not give legal advice |
What if the answer is no?
There is a free complaints pathway and it does not stop at the manager. Complain first to the responsible entity through its internal dispute resolution process, which is set out on its website and in the product disclosure statement. If that does not resolve it, you can lodge a complaint with the Australian Financial Complaints Authority at no expense, on 1800 931 678. AFCA is an alternative to tribunals and courts for complaints consumers and small businesses have with financial firms.
Members also have rights over the scheme itself, and they are stronger than most investors realise. INFO 159 sets out two: members collectively have the right to call meetings to consider resolutions about the scheme and its management, including amendments to the constitution, the removal and replacement of the responsible entity, and winding up the scheme; and individual members have standing to approach the courts for orders including injunctions, winding-up orders, and orders appointing a temporary responsible entity. Separately, a responsible entity that wants to make a rolling withdrawal offer, meaning periodic offers to all members rather than a single one, has to seek ASIC relief to do it. Court applications and members' meetings are legal processes and are a matter for a solicitor, not for a broker or a fund manager.
What does a frozen mortgage fund mean inside an SMSF or against the age pension?
A frozen mortgage fund creates a documentation problem inside an SMSF and generally keeps counting against the age pension, which are two separate consequences that have nothing to do with whether the investment itself was sound. Both systems ask what you can turn into cash rather than what you own. That is the part people miss, and it is the reason this asset class deserves particular attention inside a superannuation fund or alongside an income support payment.
Inside a self-managed super fund
Liquidity is a documented obligation for an SMSF trustee, not a preference. The ATO's guidance on creating an SMSF investment strategy requires investments to be permitted by the trust deed and superannuation laws, to show clear legal ownership by the fund, to be made on a commercial arm's length basis at true market value, and to meet the sole purpose test. It also says the strategy must consider the "liquidity of the fund's assets (how easily they can be converted to cash to meet fund expenses and pay member benefits)".
Read that against the 80% test and the intersection is obvious. An asset that can stop being convertible to cash sits directly against the factor the strategy is required to address, and the ATO lists the start of a pension as a review trigger precisely "because you need to ensure the fund can meet minimum pension payments". The ATO also treats a transfer of an asset out of the fund as a lump sum payment, described as an in specie payment, which is a different thing from a pension payment and carries its own rules. None of that makes a mortgage scheme an unsuitable SMSF asset, and nothing on this page says it is. It makes the liquidity question a documented one, for the trustees, their accountant and auditor, and a licensed financial adviser rather than a broker.
Against the age pension
A frozen holding generally keeps counting, which is the opposite of what most people assume. Deeming exemptions are granted only in special circumstances, such as where a financial investment has failed fundamentally, and the Social Security Guide says directly that they are not granted because of poor investment performance or for companies or funds in short-term difficulties. A deeming exemption also does not alter the assessable asset value of an investment, so even where one applies the money still counts under the assets test.
The separate route is the asset hardship provisions, which can disregard the value of an asset treated as unrealisable. The condition attached to that is the one to note: for an investment to be considered an unrealisable asset under the hardship rules, the investor must have started to take all reasonable action to get back their capital, and an investment can be treated as unrealisable even if the investor may be able to recover some or all of it at some future date. Since 20 September 2001, an asset assessed as unrealisable for social security purposes is automatically exempt from deeming. Whether any of that applies to a particular person is a question for Services Australia, and a free financial counsellor can help with the claim.
How do you check a mortgage fund and its manager?
Start with the public registers, because licensing and registration are facts you can verify rather than claims you have to accept. ASIC's professional registers search covers Australian financial services licensees and registered managed investment schemes, so both halves of the arrangement, the manager and the scheme, can be checked before anything else happens.
One recent addition is worth knowing about because it addresses a specific fraud. In a June 2026 announcement, ASIC said it is collecting and publishing the website addresses of AFS licensees on the professional registers search, with more than 6,500 published, so that a person can check that the site they are dealing with belongs to the licensee whose number it quotes. Impersonating a real, licensed fund is a known pattern, and a licence number on a website proves nothing on its own. ASIC's investor alert list is the other side of the same check.
Then read the documents, of which there are three rather than one. A registered scheme offered to retail investors has a product disclosure statement. It also has a target market determination: under the design and distribution obligations, a responsible entity must develop a target market determination for a registered managed investment scheme, and that document says who the product was designed for, which is a question worth asking before deciding whether it was designed for you. And an unlisted mortgage scheme reports against RG 45's benchmarks and disclosure principles on an "if not, why not" basis, so the answers, including the ones that say why not, are the point.
| What to check | Where it lives | What it tells you, and what it does not |
|---|---|---|
| The AFS licence | ASIC's professional registers search | That the manager is authorised to provide the financial service. It is an authorisation, not a rating of the scheme or of anybody's competence |
| The scheme registration | The same register, under registered managed investment schemes | That the scheme is registered under Chapter 5C. Registration is a status, not an endorsement of the loan book |
| The licensee's website address | Published by ASIC on the registers since 2026 | That the site you are on belongs to the licensee whose number it quotes. It is an anti-impersonation check, nothing more |
| The product disclosure statement | The manager, and its website | The withdrawal terms, the fees and the risks as the scheme states them. It is the document that governs your rights |
| The target market determination | The manager, under the design and distribution obligations | Who the responsible entity designed the product for. It does not tell you whether you are in that group |
| The RG 45 benchmark report | Usually the manager's website, updated periodically | How the scheme reports against ASIC's benchmarks and disclosure principles, including where it says why not |
| Fees and costs | The PDS and the periodic statement, under RG 97 | What is charged and where. A headline rate quoted elsewhere is not subject to the same regime |
How to work through what those documents actually ask, and what a weak answer to one of them looks like, is a longer exercise and is covered in what those disclosure tests actually ask.
What happens when a borrower stops paying?
The fund enforces its security over the borrower's property: a default notice is issued, the statutory period runs, and if the default is not remedied the mortgagee may exercise the power of sale over the property. The periods are set by state legislation and they are not uniform. In New South Wales a default notice under the Real Property Act 1900 must allow at least one month, or a longer period if the mortgage fixes one. In Queensland, the Property Law Act 2023 requires a notice giving 30 days to remedy the default, running from when the notice is given. Other states run their own clocks, so the state the security sits in genuinely changes the timetable. Where a receiver or other controller conducts the sale, section 420A of the Corporations Act requires all reasonable care to sell for not less than market value where there is one, or otherwise for the best price reasonably obtainable.
What that means for an investor is unglamorous but important: enforcement takes time, it costs money, and both come out of the recovery. The gap between a loan going into arrears and cash returning to the pool is measured in months at best, and during it the loan produces nothing.
It is also worth drawing a boundary that most writing on this topic blurs, because not every non-bank lender is a mortgage fund. The Reserve Bank describes two different funding models. Securitisers' funding "comes mostly through warehouse facilities during the loan origination phase, and then from the securitisation market once loans are packaged and sold to investors", and "Non-banks' warehouse facilities are mostly provided by banks, including Australian banks". Non-securitisers, by contrast, "fund themselves mostly through loans and equity (primarily from specialist lenders, which are typically funded by investor equity, and high net worth individuals and family offices)". That second description is the mortgage fund model, in the central bank's own words. A warehouse-funded lender and an investor-funded mortgage scheme can look identical to a borrower and are entirely different animals underneath, with different creditors, different liquidity and different failure modes. Neither of them is a bank: APRA's own licensing guidelines state that a business only proposing to provide finance, and not proposing to take deposits, does not require an authorised deposit-taking institution licence from APRA.
What does a mortgage fund look like from the borrower's side of the table?
From the other side of the table
Everything above describes these funds from the investor's end. Our own experience of them is from the opposite end, as a broker placing borrowers with them, and four things look different from there.
- The credit process feels nothing like a bank's. A bank starts with the borrower and works towards the security. A fund usually starts with the security and works back, because the security is what its investors are ultimately relying on.
- A fund will often ask for things a bank does not, particularly around the exit: how the loan gets repaid, from what, and by when. It will sometimes not ask for things a bank insists on, because the analysis is not built the same way.
- The fund's mandate, meaning its own promises to its investors about what it will lend against, is frequently the thing that actually decides a borrower's deal. When a lender says no to a file that looks perfectly fundable, the constraint is often the mandate rather than the merits, and a borrower can usually tell because the objection is categorical rather than about the numbers.
- When a borrower stops paying, the fund's response is shaped by its obligations to unitholders rather than by how reasonable the borrower is being. That is the loop that closes the two sides of this page: the investor's protection and the borrower's experience of enforcement are the same fact seen from opposite ends.
Broking experience, offered as observation only. It is not financial product advice, not a statement about any particular fund, and no outcome, cost or timeframe is implied.
A borrower with a first mortgage to a pooled scheme misses payments. Income from that loan stops at once. The responsible entity issues a default notice, the statutory period runs, and if the default is not remedied the security is enforced and the property sold. The proceeds go first to the costs of enforcement and then to the loan, and the pool receives whatever remains. If the property realises more than the loan and costs, the pool is made whole and the surplus belongs to the borrower. If it realises less, the shortfall sits with the pool, which is why the valuation and the loan to value ratio at origination matter more than any other single input. Illustrative only; it describes a mechanism, not an outcome, and every file is different.
If you have arrived here as a borrower rather than an investor, the practical question is a different one, and it is answered on the borrowing from a private lender page. Related structures are covered in the guides on what a private mortgage lender is and how a second mortgage ranks behind an existing loan.
A mortgage fund is a lender funded by investors. That single fact explains the rest of the structure. You hold units and not mortgages; the responsible entity, not you, decides what gets lent; scheme property is held on trust and kept separate from the manager's own assets, which protects the assets from the manager but not their value; the income is borrower interest, net of fees, and it stops when borrowers stop; and liquidity depends on whether the underlying loans can be turned into cash, which is why a scheme can become illiquid and why the regulator warns the wait to get money back can run to 12 months. valuation is a statutory duty of the responsible entity rather than a market price, so the unit price moves when the scheme revalues and not when the property market does. Australia's failure record is a liquidity and valuation record before it is anything else, and the same two themes are what ASIC is warning about again in 2026. What a scheme lends against, who holds the security, and what happens to withdrawals when the scheme cannot sell are all matters its disclosure documents are required to address.
Key takeaway: the protections that genuinely exist in this structure are about custody and accountability, not about capital. Nothing in a mortgage scheme guarantees the money, and no government scheme stands behind it.Frequently Asked Questions
A mortgage fund pools money from many investors and lends it to property borrowers, taking a mortgage over real property as security. You are issued units in the scheme rather than an interest in any individual loan. Borrowers pay interest, the manager deducts its fees and the scheme's costs, and what remains is available for distribution to unitholders under the scheme's constitution.
There is no fixed or guaranteed rate, and this page publishes no return figures. The income is the interest borrowers pay on the money they have drawn, less the manager's fees and the scheme's costs, and each scheme's product disclosure statement sets out how distributions are calculated and when they are paid. One finding is worth carrying into any figure you see quoted elsewhere: in the surveillance ASIC reported in November 2025, only four of the 28 private credit funds reviewed published information about the interest rates or ranges charged to borrowers.
Yes. Lending to businesses and property borrowers outside the banking system is lawful, and where a fund is offered to retail investors it is a registered managed investment scheme under Chapter 5C of the Corporations Act, operated by a responsible entity that holds an Australian financial services licence. Being regulated is not the same thing as being guaranteed.
Capital is at risk and there is no government guarantee. ASIC's own consumer material states that investing in unlisted mortgage schemes is riskier than term deposits offered by banks, building societies and credit unions that are prudentially regulated in Australia. The security behind the lending is a registered mortgage over property, so recovery on a default depends on what that property realises.
The Corporations Act requires scheme property to be held on trust for members and kept separate from the responsible entity's own property, and a responsible entity can be replaced without the scheme ending. That separation protects the assets from the manager's own creditors. It does not protect their value, and no compensation scheme stands behind the loans.
No. A term deposit is a deposit with an institution and, at an APRA-licensed bank, building society or credit union incorporated in Australia, is protected by the Financial Claims Scheme up to $250,000 for each account holder at each institution. Units in a mortgage scheme carry no such protection, and the Financial Claims Scheme does not cover institutions APRA has not licensed.
It varies by scheme and is set in the offer document rather than by law. ASIC noted in January 2026 that retail access to private credit is expanding, with investment thresholds as low as approximately $2,000 and platforms including superannuation enabling participation in products the regulator describes as inherently less transparent and in some cases more complex. A low minimum measures how easy the product is to buy, not how risky it is to hold.
ASIC, under the Corporations Act. A retail mortgage fund must be registered as a managed investment scheme and operated by a responsible entity holding an Australian financial services licence, and ASIC runs a disclosure regime over unlisted mortgage schemes under its own regulatory guide. APRA does not regulate mortgage funds; it prudentially regulates banks, insurers and superannuation funds.
The scheme does not automatically end with it. Scheme property is held on trust for members and must be kept separate from the responsible entity's own property, and the Corporations Act provides machinery for a new responsible entity to take over, with documents taking effect as if the new entity had been the party all along. Losses already suffered inside the loan book are unaffected by any of that.
There is no fixed maximum. A scheme becomes non-liquid, or in ASIC's consumer wording illiquid, when 80% of its assets can no longer be sold at market value in a reasonable period, and members can then withdraw only in accordance with a withdrawal offer the responsible entity chooses to make. ASIC warns that you might have to wait as long as 12 months to get your money back, and a responsible entity is not obliged to offer or grant a hardship withdrawal.
An SMSF can hold units in a mortgage scheme where the investment is permitted by the fund's trust deed and superannuation laws, shows clear legal ownership by the fund, is made on a commercial arm's length basis at true market value, and meets the sole purpose test. The ATO also requires an investment strategy to consider the liquidity of the fund's assets, meaning how easily they can be converted to cash to meet fund expenses and pay member benefits, and that is the factor this asset class puts pressure on, because a mortgage scheme can stop being liquid. Whether it suits a particular fund is a question for the trustees, their accountant and auditor, and a licensed financial adviser.
A scheme's responsible entity is the public company that is legally accountable for operating a registered managed investment scheme. It holds an Australian financial services licence, it holds scheme property on trust for members, and it answers for the scheme whether or not it performs the day-to-day work itself.
Not necessarily. Both retail and wholesale mortgage funds exist. Retail funds are registered schemes offered under a product disclosure statement, while wholesale funds are unregistered and open only to investors who meet the statutory tests. Those tests are a separate subject and are covered in the guide to wholesale and sophisticated investor tests.
Possibly, if the responsible entity offers hardship withdrawals and you meet one of ASIC's four criteria: urgent financial hardship, unemployment for at least three months with no other means of support except government assistance, defined compassionate grounds, or permanent incapacity. Members who qualify may, at the responsible entity's discretion, withdraw up to $100,000 per calendar year across up to four withdrawals. A responsible entity is not obliged to offer or grant one, and the schemes that have told ASIC they intend to are listed in its information sheet for responsible entities of frozen funds.
Generally yes. Deeming exemptions are granted only in special circumstances, such as where a financial investment has failed fundamentally, and are not granted for poor investment performance or for funds in short-term difficulties. A deeming exemption also does not change the assessable asset value. A separate hardship provision can disregard the value of an asset treated as unrealisable, but only where the investor has started to take all reasonable action to get their capital back. Whether it applies to you is a question for Services Australia, not for a mortgage fund manager.
A distribution from a managed investment scheme is not necessarily all one kind of income. The ATO's guidance on managed investment trusts explains that the distribution statement you receive after the end of the financial year, an annual member statement or standard distribution statement, sets out the components you need for your tax return, which can include income and capital gains elements. How that applies to you depends on how you hold the units, whether personally, through a trust or through a superannuation fund, and it is a question for your accountant.
Yes. A first mortgage gives the lender priority over later-ranking mortgagees, but if the property's net sale proceeds after enforcement and recovery costs are less than the amount owed to the first-ranking lender, that lender can still suffer a loss. First-mortgage ranking, current value and the loan to value ratio need to be read together.
It can, if the scheme's documents permit it. Fund-level borrowing is separate from the mortgages owed by property borrowers, and it changes how the scheme behaves under stress, because a lender to the fund ranks ahead of unitholders. Whether a scheme borrows, and on what security and covenants, is one of the matters ASIC's disclosure regime for unlisted mortgage schemes requires it to address, so the answer lives in the offer documents and financial statements rather than the marketing.
Impairment means the scheme has recognised that full recovery on a loan is less certain, or that an expected credit loss should be allowed for under the accounting standards. It is not necessarily a realised loss. Because ASIC has said inconsistent definitions for arrears and impairment are reducing comparability across funds, the useful questions are what triggered the impairment, whether the security was revalued, and how the scheme itself defines impairment and arrears in its scheme reporting.
Check both halves on ASIC's professional registers search: the manager's Australian financial services licence, and the registration of the scheme itself. Since 2026 ASIC also publishes the website addresses of AFS licensees on that register, so you can confirm the site you are dealing with belongs to the licensee whose number it quotes, and its investor alert list names entities not to be trusted. A licence is an authorisation to provide a financial service, not a rating of the first mortgage book behind it.
What sources support this guide?
Every figure and every quotation on this page was read at its primary source for this guide, and where a claim did not survive that check it was removed rather than softened. Three examples are worth naming because they run against material published elsewhere. A second statistic about fee disclosure, widely repeated alongside the interest-rate finding this guide does publish, does not match what the report actually says, so only the finding that was verified appears here. A commonly quoted market-size percentage uses a different denominator from the one used on this page, so only one sizing appears and its denominator is stated in the same sentence. And a term-deposit notice period often attributed directly to a prudential standard is stated here in the regulator's own framing instead.
This page also carries no return, yield or distribution figure of any kind. That is deliberate. Explaining how income is generated is factual information; publishing or matching a return figure for a financial product is not something a credit-licensed business can do, and a page that did it would be doing something different from what this one is doing.
| Source | What it supports | As at |
|---|---|---|
| Corporations Act 2001 (Cth), Chapter 5C, ss 601FC, 601FT, 601KA and 601KB | That a registered scheme is the structure a retail mortgage fund sits in; that the responsible entity holds scheme property on trust and must keep it clearly identified and separate from its own property and from other schemes; that a change of responsible entity carries documents across to the new entity; and that members of a non-liquid scheme may withdraw only in accordance with a withdrawal offer | Current, read Aug 2026 |
| ASIC Regulatory Guide 45, Mortgage schemes: improving disclosure for retail investors | That ASIC has developed eight benchmarks and eight disclosure principles for all unlisted mortgage schemes in which retail investors invest, disclosed on an "if not, why not" basis. They are not listed, named or tabled on this page | Issued Mar 2026 |
| ASIC REP 820, Private credit surveillance: retail and wholesale funds | The surveillance period and sample of 28 funds; the split into 20 registered retail funds with assets under management of $26.6 billion and eight wholesale funds at approximately $3 billion; and the finding that only 4 of the 28 published information about the interest rates or ranges charged to borrowers | Published 5 Nov 2025 |
| ASIC news item, private credit ahead of 30 June valuations and reporting | The regulator's stated position on liquidity, borrower stress and credit deterioration testing valuations, governance and investor disclosures; that redemption requests remain contained in aggregate; that weaker borrower conditions are increasing the risk that reported valuations do not fully reflect underlying economic conditions; that inconsistent definitions are reducing comparability across funds; and the 3 stop orders of 2025, cited by media release number and not by fund name | 18 Jun 2026 |
| ASIC Key issues outlook 2026 | That retail access is expanding with investment thresholds as low as approximately $2,000, and that platforms are enabling participation in "inherently less transparent and in some case more complex products". The threshold and the warning are quoted together because they are one statement | 27 Jan 2026 |
| ASIC information sheet on frozen funds and hardship withdrawals | The description of an illiquid scheme as one where 80% of its assets can no longer be sold at market value in a reasonable period; the withdrawal-offer mechanism; and that a responsible entity is not obliged to offer or grant a hardship withdrawal | Modified 30 Apr 2024 |
| ASIC MoneySmart, Investing in mortgage schemes | That investing in unlisted mortgage schemes is riskier than term deposits at prudentially regulated banks, building societies and credit unions; and that even where a scheme says you can take your money out at short notice, you might wait as long as 12 months to get it back | Read Aug 2026 |
| ASIC on credit and financial services licensing, and on 31-day notice term deposits | That engaging in credit activities and providing financial services requires two separate licences, a credit licence and an AFS licence; and that institutions require 31 days' notice to break a term deposit to assist with liquidity management and APRA's liquidity coverage ratio requirements | Read Aug 2026; 28 Mar 2025 |
| ASIC INFO 159, Frozen funds and hardship withdrawals | That a freeze does not necessarily mean value has decreased, money has been lost or distributions have stopped; that responsible entities must notify members; the four hardship criteria; the $100,000 per calendar year and four withdrawals per calendar year limits, subject to the responsible entity's discretion; that funds proposing hardship withdrawals are listed in the appendices to INFO 249; that a rolling withdrawal offer requires ASIC relief; the members' meeting and court-order rights; and that ASIC does not determine hardship and does not give legal advice | Updated Mar 2024, read Aug 2026 |
| ASIC on managed fund asset valuations, and 21-212MR on the valuation of illiquid assets | That scheme property should be valued at regular intervals appropriate to its nature and that valuations should be carried out by unbiased valuers who are periodically rotated by the responsible entity; that ASIC may act against responsible entities that do not provide fair and reasonable valuations; and the good practices identified in its review, including segregation of roles, independent committees and multi-level review of internal and external valuations | Read Aug 2026 |
| AASB 9 Financial Instruments | That a loss allowance for expected credit losses is recognised on financial assets subject to the impairment requirements, and the rebuttable presumption where contractual payments are more than 30 days past due. Used to explain why a unit price moves on recognition rather than on market movement, and not as a statement about any scheme's accounting policy | Read Aug 2026 |
| ASIC professional registers search, design and distribution obligations for schemes, RG 97, and 26-122MR | That AFS licensees and registered schemes are both searchable; that a responsible entity must develop a target market determination for a registered scheme; that RG 97 governs how fees and costs are disclosed in product disclosure statements and periodic statements; and that ASIC is publishing AFS licensee website addresses on the registers, with more than 6,500 published, as a check against imposter scams | Read Aug 2026; 17 Jun 2026 |
| DSS Social Security Guide and Services Australia asset hardship provisions | That deeming exemptions are granted only in special circumstances such as an investment that has failed fundamentally and not for poor performance or funds in short-term difficulties; that a deeming exemption does not alter the assessable asset value; that the hardship rules may disregard an unrealisable asset only where the investor has started to take all reasonable action to recover their capital; and that an asset assessed as unrealisable has been automatically exempt from deeming since 20 September 2001 | Read Aug 2026 |
| ATO, Create your SMSF investment strategy (QC23320), and on managed investment trusts | The four SMSF investment requirements; that an investment strategy must consider the "liquidity of the fund's assets (how easily they can be converted to cash to meet fund expenses and pay member benefits)"; that the start of a pension is a review trigger because the fund must be able to meet minimum pension payments; that an asset transfer out of a fund is a lump sum, known as an in specie payment; and that a managed investment trust distribution statement sets out the components needed for a tax return | Last updated 2 Apr 2025, read Aug 2026 |
| APRA deposit checker and System Risk Outlook; Banking Act 1959 (Cth) s 13A | That deposits are protected up to $250,000 for each account holder at each licensed institution incorporated in Australia and that the Financial Claims Scheme does not cover institutions APRA has not licensed; the estimate of private credit in Australia at around $200 billion against the size of the banking system; and the depositor priority applied to an Australian bank's assets in Australia, which is stated here rather than quoted | Read Aug 2026; 21 May 2026 |
| RBA Bulletin on non-bank lending; AFCA investments and financial advice | The distinction between securitisers funded through warehouse facilities and the securitisation market, and non-securitisers funded through loans and equity from specialist lenders, investor equity and high net worth individuals and family offices; and the external complaints pathway available where a firm is an AFCA member | Read Aug 2026 |
Regulator guidance, prudential standards and legislation change, and every scheme's own constitution and disclosure documents displace the general positions summarised here. Nothing on this page is a statement about any particular fund. Where a period, a threshold or a limit is given, it is a statutory or regulatory position and is not a statement about any product you are considering. This guide contains no return, yield or distribution figure, makes no comparison of named funds, and expresses no view on whether a mortgage fund is a suitable investment for anybody. Those are questions for a licensed financial adviser and for the fund's own disclosure documents.
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