Cross Colateralisation

Will need some more info to make some suggestions.

Might be best to speak to a new broker direct rather than publish too much info here – ask around for a referral.

Cheers,

Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

How would it suit a broker to xcoll? I am not being sarcastic – am genuinely curious.

Cheers,

Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

Hi

Just ask for a release of security…hmmm Well i asked the NAB and they said NO.

regards
alf

Terry, Rolf Latham gave a talk a little while ago that I went to, and he had stories of it costing up to $60K to uncross properties – AND it took many many months to do so….. In this instance there were quite a few properties, but even lesser numbers took a lot of time, and sometimes quite a bit of money too..[baaa]

bigmark, I think you’ll find that it suits banks nicely to cross properties – and makes it harder for brokers to find new finance if you can’t then use some of the securities…

Cheers
Mel

Terry,

We had the same problem with Colonial, had 30% equity in the property (place was valued by the valuer they would accept) and they said NO, when I questioned the decision they said “it wasn’t their policy”.

When the fixed terms come due I’ll take the loans elsewhere, mainly becasue I wasn’t happy with their unhelpful answer.

PK

Milly- present the argument to the bank or broker as a 1st point. If you are selling and buying another, you could offer the new property to replace the one you are selling (as security). The bank can also be asked to set out in writing to you why they wont “allow” you to have the others as stand alone. The lender usually will take as mush security as is willing ot be provided at the onset, and releasing this becomes an issue.

Chris Durman
Commercial Capital Finance Pty Ltd
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Milly,

When we sold our PPOR which had the IP’s all cross collateised, they then took the new PPOR as the security over all the IP’s. This was at a “cost” as I was changing securities, I think it cost us $150 per property.

So at present we have one IP that is stand alone, and 3 that are cross-coll. One of the three only has itself and our PPOR as security, and that’s the one we will refinance shortly. The other two IP’s have themselves, the other IP and our PPOR as security. These two IP’s are on fixed terms so when they fall due next year then I give the bank a choice of either refinancing with only the properties as security for themselves or I’ll take the business elsewhere as each property has enough equity now to cover itself so that gives me more options. I’d do it sooner, but we are on a good interest rate at present so that’s why I’ll let them have their way for another year.

I don’t think you will have a probelm if you wanted to sell one, unless you’re other properties don’t have enough equity to please the bank, if this is the case, they may ask for cash from the sale to reduce one or more of your other mortgages to bring it within their guidelines. Also, this may mean the securites on the other mortgages have to be changed and this may be at a cost!

Each bank is a bit different so you probably need to talk to your bank to find out their “policy”.

Good Luck
PK

Commissions we get are the same whether the loans are xcoll or not.

Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

The only person benefiting from cross-collateralising is the lender taking the security. Having multiple properties provides them with the opportunity to sell the most ‘saleable’ property in the event of default (taking possession).

I think people are mad to cross-collateralise unless there is a security type issue that requires it to increase the LVR.

Robert Bou-Hamdan
Mortgage Adviser

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