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Subordinated mortgages. Attractive returns with Swiss real estate
The performance of our mortgage portfolio has been one of the most stable asset classes on the LEND platform for years. Many investors use real estate loans as an attractive addition to traditional fixed-income investments.
Subordinated mortgages: stable returns since 2018
A look at the figures shows why.
| Mortgage | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | Sum |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2018 | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.21% | 0.06% | 0.18% | 0.28% | 0.15% | 0.87% |
| 2019 | 0.25% | 0.22% | 1.02% | 0.26% | 0.31% | 0.97% | 0.29% | 0.22% | 0.07% | 0.30% | 0.58% | 0.69% | 5.17% |
| 2020 | 0.22% | 0.61% | 0.84% | 0.36% | 0.51% | 0.85% | 0.26% | 0.37% | 0.70% | 0.26% | 0.26% | 0.43% | 5.67% |
| 2021 | 0.26% | 0.56% | 0.39% | 0.25% | 0.27% | 0.49% | 0.48% | 0.23% | 0.29% | 0.39% | 0.31% | 0.58% | 4.50% |
| 2022 | 0.32% | 0.38% | 0.66% | 0.46% | 0.41% | 0.37% | 0.43% | 0.43% | 0.38% | 0.30% | 0.36% | 0.37% | 4.86% |
| 2023 | 0.47% | 0.34% | 0.29% | 0.48% | 0.45% | 0.20% | 0.41% | 0.45% | 0.41% | 0.63% | 0.44% | 0.50% | 5.06% |
| 2024 | 0.46% | 0.34% | 0.57% | 0.47% | 0.35% | 0.10% | 0.63% | 0.36% | 0.40% | 0.48% | 0.41% | 0.47% | 5.05% |
| 2025 | 0.45% | 0.88% | 0.90% | 0.51% | 0.50% | 0.40% | -0.65% | 0.48% | 0.55% | 0.48% | 0.52% | 0.67% | 5.70% |
| 2026 | 0.46% | 0.46% | 0.92% |
Source: Exaloan Report 02/2026
Since inception, the average return of the mortgage portfolio has been around 5 percent per year, or 4.2 percent after defaults and fees. Volatility remains low.
Over the past year, the return was even 5.7 percent. The maximum loss during this period was minus 0.65 percent.
Compared with traditional fixed-income investments in Swiss francs, the difference is noticeable. Investment-grade corporate bonds often generated annual returns of between 0 percent and 1 percent over many years. A look at our statistics page shows that subordinated mortgages as an asset class also perform well within LEND when compared internally with personal loans and business loans.
Higher risk premium for subordinated mortgages
The higher return reflects a risk premium. At LEND, most financed mortgages are subordinated mortgages, also known as second mortgages. This means that a first mortgage already exists on the property, usually provided by a bank. Financing through LEND takes place in second rank. If the property is liquidated, the bank is repaid first. Investors in the second mortgage are repaid afterwards. This additional risk explains why investors receive a higher interest rate for this type of financing.
At the same time, the portfolio’s performance also shows that in the vast majority of cases, everything goes according to plan. If the default risk were truly high, this would be directly reflected in significantly weaker performance.
What is the worst-case scenario?
Nevertheless, it can happen that a mortgage borrower is no longer able to make payments. In that case, the property must be sold.
In many cases, this happens in agreement with the owner. The debtor sells the house themselves in order to repay the mortgage. For investors, this is usually the best solution, because a regular sale generally achieves the highest price. If this is not possible, legal proceedings follow. Even if sufficient property value is available, this process takes time.
The path from the first payment difficulty to the actual liquidation of a property involves several legal steps: debt enforcement proceedings, judicial enforcement of the claim and finally, if necessary, a forced auction. Due to statutory deadlines and possible legal remedies alone, this process can take many months or even years. In practice, such a process can take up to three years or longer. For investors, this means one thing above all: patience.
Does LEND have recovery experience?
Our experience over the past few years shows that such cases are rare.
Since the introduction of second mortgages in 2018, a total of 761 loans secured by real estate liens had been issued as of March 2026. Only 38 of these experienced a repayment delay of more than 90 days.
Of these 38 loans, we were able to repay 28 to our investors with the full capital amount and accrued interest, even if with a delay.
For 9 loans, the recovery process is still ongoing, and in only one case did the investment have to be fully written off because the proceeds from the forced sale were not high enough.
Such situations can never be completely ruled out in real estate financing. This is exactly why one principle plays a central role in private debt investing: diversification.
Investors who spread their capital across many different loans significantly reduce the risk of individual defaults. This is precisely why many investors on LEND invest in a broad range of projects instead of concentrating on individual loans. In addition, they diversify their capital across different types of loans, investing not only in mortgages but also in personal loans and business loans.
