All Topics / The Treasure Chest / How to discharge a cross-collateralised property

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  • Profile photo of maximusmaximus
    Member
    @maximus
    Join Date: 2003
    Post Count: 189
    August 28, 2003 - 9:19 am

    Hi all. If I wanted to discharge a property from a cross-collateralised loan, is it just a matter of getting them revalued and if 1 of them is valued higher than the loan (as long as LVR figures are right) then I can discharge the other one and if so, what are the approx fees involved?

    Thanks

    Marty

    Profile photo of FocusFocus
    Member
    @focus
    Join Date: 2003
    Post Count: 10
    August 28, 2003 - 10:24 am

    Hi,

    Sorry, gonna answer a question with a question…

    Is cross-collateralisation when one uses equity in house 1 to purchase house 2 with having to use any “real” money?

    Rau[?]

    Profile photo of Cameron_2Cameron_2
    Participant
    @cameron_2
    Join Date: 2003
    Post Count: 6
    August 28, 2003 - 11:03 am

    Hi guys,

    As understand it cross-collateralisation usually is required when you have equity in one property -say your place of residence, and you want to purchase another property with finance for 100% of the purchase price plus costs, on a new, seperate loan – say an interest only loan. This keeps your tax deductable debt seperate from your non-taxdeductable debt. Both loans are secured by both properties so that the combined LVR remains below 90% (in most cases) or below 80% to avoid LMI costs.

    So if you want to restructure (say your investment loan) so that it is only secured by the the investment property, then your investment loan must be 80% of the value of the investment property (to avoid mortgage insurance).

    A loan restructure such would probably incur two sets of valuation fees – $200 to $300 each. It’s not new money so wouldn’t incure any loan stamp duty.

    Hope this helps.
    Cameron

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213
    August 28, 2003 - 12:36 pm

    Marty

    You owuld have to apply for a release of security which costs about $300 usually. The bank will probably require a re-valuation on the remaining security to make sure in comes in at an acceptable LVR.

    Terryw
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of maximusmaximus
    Member
    @maximus
    Join Date: 2003
    Post Count: 189
    August 28, 2003 - 9:04 pm

    Thanks guys for that info. I didn’t think it would be too difficult a matter, but who knows with the banks.
    Terry; Would I have to get a solicitor to organise the release of security or could I do it myself with a phone call (probably a few calls) to the bank, and once done would they send me the title deeds?

    Thanks again

    Marty

    Profile photo of MelanieMelanie
    Member
    @melanie
    Join Date: 2003
    Post Count: 382
    August 28, 2003 - 11:02 pm

    Hi Msrty,

    Normally you don’t need a solicitor involved, just to fill out the discharge forms with the lender.

    [:)]
    Mel

    Profile photo of KegglesKeggles
    Member
    @keggles
    Join Date: 2003
    Post Count: 7
    August 29, 2003 - 12:14 pm

    Hi Maximus, I just went through this I negotiated with the bank to only pay the val on one prop & the release fee was also negotiated to $150

    it is amazing what they will do if you ask.

    Hope this helps

    Profile photo of fulloutfullout
    Member
    @fullout
    Join Date: 2003
    Post Count: 233
    August 29, 2003 - 2:58 pm

    Keggles,
    may i ask which bank is it?
    you may email it to me at [email protected]

    thanks so much!
    ^^

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