RSM Law Ltd has a long and proud history of mortgage lending through our Mortgage Nominee Company. Our present mortgage portfolio is substantial. We have been lending money for rural, residential and commercial projects for over 100 years.
All lending through the Nominee Company is very strictly in accordance with The Lawyers and Conveyancors Act (Lawyers: Nominee Company) Rules 2008 and our lending procedures are audited by Auditors appointed by the New Zealand Law Society. Under these rules, we are able to lend up to a maximum of 66.66% of valuation of the property. All lending must be approved by a review committee which meets weekly to consider applications. The review committee is made up from at least three Directors and two Senior staff.
Nominee Company lending is by way of first mortgages over residential, rural and commercial properties and occasionally lending is approved to applicants from outside the South Canterbury region.
Investor funds are at all times separately identifiable within the mortgage investment and investors can at any time request a full schedule of their investments with all relevant information. At the time of investment of funds in a mortgage, the investor is given full details of the mortgage security and of the borrower (mortgagor) with a copy of the valuation of the property made available.
Mortgages are for a maximum term of 3 years on a “flat” mortgage basis, ie the mortgagor normally pays interest only on the funds throughout the term. On expiry of the term our Nominee Company may agree to renew the mortgage for a further term of 3 years provided the renewed mortgage still falls within valuation guidelines. At the time of renewal of a mortgage the investor will be asked whether or not they wish to reinvest their funds in the mortgage.
the investor wishes to withdraw the investment during the 3 year term, this can usually be arranged but the investor may be called upon to pay fees (including revaluation fees) in respect of the replacement of the investors funds in the mortgage by another investor’s funds. Funds can only be released from mortgages when the mortgage is repaid or the funds are replaced.
Investments through our Nominee Company attract a rate of return, usually 1% or 1.5% above other available fixed investment opportunities. Our Nominee Company charges an administration and collection fee of 9.1% of the gross amount of interest collected. Resident Withholding Tax is deducted at source and forwarded directly to the Inland Revenue Department. At the 31st of March each year a Tax Certificate is forwarded to the investor for taxation purposes. Net interest after deduction of commission and Resident Withholding Tax is paid out to the investor on a regular quarterly basis in February, May, August and November in each year.
For income tax return purposes the administration and collection fee is a proper claim as a deductible expense incurred in generating the interest income.
During the term of the mortgage our Nominee Company has the right to review the rate of interest to allow for market rate fluctuations either up or down. Accordingly the interest return on the investment may fluctuate.
Procedures relating to the receipt and distribution of funds are as follows:
RSM Law Limited is a registered Financial Service Provider - FSP41521