Can I get my money out of a mortgage fund in NZ? Where you stand and what to do

Can I get my money out of a mortgage fund in NZ? Usually yes, eventually, but the fund’s governing document sets the timing, and most documents let the manager slow, ration or suspend withdrawals. If yours has, read those clauses, find out whether a supervisor acts for you, and put specific questions to the manager in writing.

New Zealand investors have been here before. In 2008 the Guardian Trust Mortgage Fund and three AXA mortgage funds stopped paying out within months of each other, and in 2023 Du Val’s mortgage fund halted cash distributions well before the wider group collapsed. The pattern is familiar, and so is the way through it.

Why can a mortgage fund stop paying withdrawals?

Because a fund’s promises and its assets run on different clocks. You may be told you can withdraw monthly or quarterly. The money, though, is lent out on mortgages that repay on their own dates, often a year or more away. A manager cannot call in a performing loan early just because investors would like their cash.

While new money arrives as fast as old money leaves, nobody notices the gap. When requests pile up, the manager has two choices: sell loans in a hurry, usually at a discount that hurts everyone who stays, or slow the exits down. Fund documents almost always allow the second. That alone is not a sign of wrongdoing. It is the price of pooling: your exit depends on the fund’s cash, and on how many other investors head for the door at the same moment.

Our explainer on how redemption freezes work covers the mechanics in more depth.

Which situation is your fund in?

Managers tend to use soft language, so pin down which of these applies. Each has a different route out.

Guardian Trust’s fund moved from the third row to the fourth: it froze on 29 July 2008, and by January 2009 investors had been sent a proposal to wind it up. Du Val’s mortgage fund investors sit in the last row, after the group entered statutory management in August 2024.

What do the fund’s documents allow the manager to do?

Set the marketing aside. The legal papers are what count.

For a fund offered to the public, the key papers are the product disclosure statement, the governing document (usually a trust deed) and the statement of investment policy and objectives. Public offers are lodged on the Companies Office’s Disclose register, so you can find them even if your own copy has gone missing. For a wholesale fund, look at the information memorandum, the trust deed or limited partnership agreement, and the subscription agreement you signed.

Read with these questions in mind:

• How often may I ask to withdraw, and how long does the manager have to pay?
• Can that period be extended, and is there a ceiling on the extension?
• Is there a cap on how much can leave the fund in a period, and how is it divided?
• In what circumstances can withdrawals be suspended, and must the suspension be reviewed?
• Are requests met in the order received, or in proportion?
• Can income be held back, or paid in extra units rather than cash?
• Can investors call a meeting, or vote on winding the fund up?

If a clause is unclear, ask your lawyer. What a manager may not do is step outside the document, and that line matters, as Du Val showed.

Who is supposed to protect you?

Many investors skip this question. The answer depends on how the fund was offered.

If the fund is registered and offered to the public, the manager must be licensed and must have a licensed supervisor. According to the FMA, the supervisor must actively supervise the manager’s performance and the financial position of both the manager and the scheme, and acts on behalf of investors. Scheme property must be held on trust by the supervisor or another independent custodian. Write to the supervisor as well as the manager.

If the fund was offered only to wholesale investors, there is often no supervisor, and disclosure is lighter. The deed is your main protection, so knowing it pays. In January 2023 Du Val’s mortgage fund suspended cash distributions and proposed paying them in extra units instead. The FMA later said that conversion was not permitted under the limited partnership agreement, so investors were not bound to accept it. Those who had read the agreement were better placed than those who took the letter at face value.

The FMA receives complaints and does act on them: it sought interim receivership over Du Val entities in 2024. But it regulates the market, not individual accounts. In July 2025 the High Court struck out an investor’s claim that the FMA owed duties of care to individual investors. For advice on your own position, go to your own lawyer or financial adviser.

What should you ask the manager, in writing?

A good manager answers plainly and promptly. Keep a copy of everything you send and receive.

1. What is the total of withdrawal requests waiting, and will they be paid in turn or pro rata?
2. Which loans fall due in the next 12 months, and what do they add up to?
3. How much of the book is lent on construction, land or development?
4. How many loans are behind on payments or past their maturity date?
5. Is income still being paid in cash?
6. When were the security properties last valued, and by whom?
7. When will the current restriction be reviewed, and what would end it?
8. Does any investor have better withdrawal terms than mine?
9. Does the deed allow part payments or hardship payments, and how do I apply?

Vague replies are information too. If you believe the fund was not as described when you invested, talk to your lawyer. And before you commit money anywhere new, work through our questions to ask a private credit manager.

How long could you be waiting?

Nobody can give you an honest date without seeing the loan book. New Zealand’s own record shows how wide the range can be.

The most telling clue is the maturity profile. A book of short loans over finished property should turn back into cash steadily. A book heavy with land or development loans tends to take far longer, because those loans often repay only when a project is completed and sold. The full story of the most recent case is in what happened at Du Val.

Should you sell your units to get out?

Only after careful thought. Units in an unlisted New Zealand fund rarely have a ready market, and a transfer usually needs the manager’s consent. Now and then a buyer appears offering to take units in a frozen fund, almost always below their stated value.

Weigh that discount against how long you realistically expect to wait, check how recent the fund’s last valuation is, and take independent advice. Selling cheaply turns a delay into a loss you cannot reverse.

Whatever you decide, keep a file: every request, notice and reply, with dates. If the fund is wound up or a claim is made later, that record makes your position far easier to prove.

What does an exit look like without a pool?

The lesson of a lock-in is about structure, not one bad manager. In a pool, your exit depends on other investors and on loans you cannot see. Take both away and the question of getting your money back looks very different.

HomeSec Business Finance, a private business lender lending since 2004, with its New Zealand office in Auckland, funds most of its loans from its own balance sheet and invites wholesale investors to co-fund some of them. You pick an individual loan from its due diligence pack, your name goes on the registered mortgage for the amount you contribute, and HomeSec’s own money sits in that same loan.

How early exits work in practice is set out on getting your money back.

How do you keep your next investment liquid?

Five habits make it much harder to be locked in again, whatever you choose.

Let the asset set the date. If you might need the money within a year, choose something that matures within a year. A promise that you may withdraw is not the same thing as a maturity date.

Own your position directly. When your name is on the security, your exit depends on your loan alone.

Ladder your maturities. Spread capital across several loans that end at different times, so cash comes back in stages rather than all at once.

Stay clear of development. Construction and land loans are the slowest to repay and the hardest to value. HomeSec does not make them.

Keep a genuine cash reserve. Since 1 July 2025 the Depositor Compensation Scheme has covered bank and finance company deposits up to $100,000, but it does not cover investments. No mortgage investment counts as a deposit.

Our guide to alternatives to term deposits compares the wider options for money you won’t need straight away.

If you’d like to see how a loan with a fixed maturity date and repayments straight to your own account works, register your interest and our Funding Manager will be in touch.