LONDON, July 7 UK Mortgages, an

investment fund focused on Britain's residential mortgage

market, said on Tuesday it had raised gross proceeds of 250

million pounds to build a portfolio of loans that offer stable

income streams in volatile financial markets.

The fundraising was executed via a placing and open offer of

ordinary shares at an issue price of 100 pence per share and

attracted demand in excess of 325 million pounds ($505.28

million), the company said.

Headquartered in Guernsey, UK Mortgages is run by TwentyFour

Asset Management and targets a net total return of 7-10 percent

a year.

UK Mortgages Chairman Chris Waldron said the funds were

raised in a "significantly oversubscribed fundraising," adding

that "the demand for the product is testament to the asset

class' potential returns."

"The income potential and historically low correlation to

other asset classes has clearly appealed to investors," said

TwentyFour Chief Executive Mark Holman.

UK Mortgages aims to pay a dividend of 3 pence per ordinary

share for the financial year ending June 30 2016 with a first

interim dividend to be paid in April 2016.

Numis Securities Limited acted as UK Mortgages' broker and

financial adviser and will continue working with the company.

($1 = 0.6432 pounds)

(Reporting By Pamela Barbaglia, editing by Sinead Cruise)