Hello Everyone,
As I am starting to look for my first investment property, I realize how little I really know and how much there is to learn out there.
I want to start this topic to discuss the potential downsides of cross collateralising when it comes to obtaining bank loans. I think one of the difficulties is the additional costs to valuate all the properties that are a part of the one loan.
I am hoping to shed some light on why one should not structure a loan with the properties cross collateralize.
Thank you,
TongTong i think you have my emailed list 10 reasons and since doing so 3 more have come to mind.
Bit suprised your mortgage broker didnt point out the pitfalls but then saying that maybe i am not.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Three more reasons? I’ll email you for them. Reading around the other forum topics, I find that crossing coll. loans is not the way to go.
Thanks,
TongTong wrote:Three more reasons? I'll email you for them. Reading around the other forum topics, I find that crossing coll. loans is not the way to go. Thanks, TongYep, steer clear of it – it can get real messy. Especially if you're looking to purchase more than a couple of properties.
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Hi,
This is a really interesting topic. Having multiple properties purchased using equity from other preoperties we do have some degree of cross collateralisation in our loans in order to achieve that.
I'd love to hear some of your strategies on using equity to purchase investment properties whilst steering clear of cross collateralisation if you wanted to share them?
Cheers,
Kaz
Kaz
There is absolutely No need to cross collateralise the securities even though you are using equity in 1 property to fund the deposit on another.
Shoot me an email and i will let you have my 10 Reasons not to cross collateralise your loans factsheet.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Richard,
Thanks for your response, my error – we are not cross collateralized – as in we do not offer more than one property as security.
I will send you an email as I'd be interested to chat some more about the topic with you.Cheers,
Kaz
Use equity in one property for deposit, legals etc then have a stand alone loan for 80% (or 90% if you are that way inclined) on the new property.
Value up and pull the extra equity out to pay the deposit and legals on the next property. Get another stand alone loan for that IP.
Repeat, repeat, repeat until you reach the LVR you are comfortable with.
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