What is bad with Cross Collateralisation

Terryw,

How do you calculate LVR?
Thanks Dom []

Steven

I still can’t get what you are saying and your link provides no clues either. I agree that Trusts are an excellent tool and hold all of my properties in a trust structure. I know that trusts help save tax and so help serviceability in that regard, but I do not beleive having a trust increases your borrowing power because of the guarrantees required.

Are you of a different opinion?

Terryw
Discover Home Loans
North Sydney
[email protected]

Hi all,

Im with NAB and have an existing LOC with them up to $185K secured by 2 houses (paid first one off totally, applied for LOC and bought another). I have over 50K in equity with that LOC.

I am currently buying my 3rd also through the NAB as we speak. I knew the NAB would take this 3rd property with a 70% LVR, as a friend is also buying one. The strange thing is that they wouldnt increase my LOC accordingly (with new property as security for increase), instead they want it to be a seperate P&I.Heres their best figures.

quote:

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Variable Rate Home Loan Choice Package (no bank fees at all – no application fee and no ongoing account fees) this has a variable interest rate of 6.060% over 30 years

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But they still want to take my first 2 properties as security for the 3rd property purchase.? [?] ?

I dont understand why the NAB would do this. I have more than enough equity available for a deposit instead of using my first properties as security. I have informed the bank that I would rather not do it this way and Im waiting on their reply.

Can any of you offer any insight into their reasoning for this or a better way to go about it.? As they wont increase my existing LOC, I thought by using a sub account within my LOC with funds to cover my deposit, would be better than this cross collateralisation as you all have been discussing.

1 other question I have for the brokers is why would a lender lower their LVR because an individual resides overseas ?

Cheers

J

“Success comes from having the proper aim as well as the right ammunition”

Hi OzpatinQ8,

As an o/s investor myself I have found this is common amongst the lenders. I think it may have a little to do with how far they can check your income. Generally people who are working o/s normally finish their employment and move on so there is a higher risk for the bank as well(quote from lender at which bank). You may want to check with ANZ as I have heard that they will allow 95% for o/s investors. If your looking for a good broker I can refer you to one from this forum.

C2
“Is it true the more you owe the more you grow until the bank steps in?”

I am sure that Terry, Simon and I throw our hands up every single day of the week with stories like this.

They are all as bad as each other so dont worry.

Loan structuring is not rocket science but it is a unusual trade only practised by those with a degree of professionalism in the industry.

Bankers do not have this vision as they are solely focussed on security and dam the client at all expense.

There is always a better way of doing things so i would invite every member to think about contacting a specialist mortgage broker with a view to reviewing your portolfio.

This is NOT a push for business but a genuine offer for forum member to feel free to allow one of us (and i assume Terry / Simon have no problems with this) to have a look at your structure and see whether it will cause you problems in the future.

There is NO CHARGE WHATSOEVER for this advice.

Cheers

Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
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