All Topics / Finance / Multiple security substitutions

Viewing 12 posts - 1 through 12 (of 12 total)
  • Profile photo of wilko1wilko1
    Participant
    @wilko1
    Join Date: 2010
    Post Count: 510

    Hi All

    i thought I would just put this question out there to see if anyone has heard of this happening

    Im aware that a person/trust/entity can security substitute to purchase a new property after the sale of a existing one.

    But I wish to know if anybody has used multiple security substitutions  to secure a new property 

    My example would be.

    property A 500k value (80% lend), 400k loan – bought and sold. Loan retained in term deposit

    Property b 500k value 80% lend, 400k loan – bought and sold.Loan retained in term deposit

    Property C purchased for 1 million

    80 percent lend.

    Now is that at first possible.

    – would loan A be secured against the property and the other loan B just be either a second mortgage, just another loan, like a LOC set up over a PPOR mortgage etc.

    Taking this one step further assuming you could do the above process. With having multiple loans against one security. Does anyone know of any cases where someone has used more then 3 security substitutions to obtain a property.

    Could be 4 x 200 K loans held in term deposits that are then used to secure a 1 million dollar property with 20 percent deposit (cash)

    Your thoughts on this would be appreciated

    Thanks wilko

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi Wilko

    Yes certainly feasible and pre NCCP was done on a regular basis.

    Now of course slightly difference under Responsible Lending Guidelines.

    Loan would still need to be re-assessed under normal terms.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of HomeLoanExpertsHomeLoanExperts
    Participant
    @homeloanexperts
    Join Date: 2007
    Post Count: 43

    Unless the loans are fixed it is best just to keep it simple and apply for a new loan on the new property. Trying to get the bank's backend system to allow it is more likely to be a challenge than their policy not allowing it.

    Profile photo of wilko1wilko1
    Participant
    @wilko1
    Join Date: 2010
    Post Count: 510

    i was under the impression that if you did a straight forward one for one security substitution that borrowing requirements were relaxed. I.e You wouldn't have to provide documents proving income/payg or self employed income again for the substitution to occur. Just a valuation to show the new security is of the same or greater value then the original.

    My scenario for this would be a self employed builder/developer who already has a series of loans for development projects and is happy to just substitute a old project in for a new project without having to go through providing all the income requirements again.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi Wilko

    Hate to say being self employed i don't think you would have any chance as the lender is always going to want to ensure the current set of Accounts are upto date and sufficient to service the new loan.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of Mick CMick C
    Participant
    @shape
    Join Date: 2010
    Post Count: 1,099
    wilko1 wrote:
    i was under the impression that if you did a straight forward one for one security substitution that borrowing requirements were relaxed. I.e You wouldn't have to provide documents proving income/payg or self employed income again for the substitution to occur. Just a valuation to show the new security is of the same or greater value then the original.

    My scenario for this would be a self employed builder/developer who already has a series of loans for development projects and is happy to just substitute a old project in for a new project without having to go through providing all the income requirements again.

    Sorry mate, that not simple; Full assessment is required. 

    Mick C | Shape Home Loans
    http://www.shapehomeloans.com.au/
    Email Me | Phone Me

    Same Banks. Better Rates. Served With a Passion.

    Profile photo of wilko1wilko1
    Participant
    @wilko1
    Join Date: 2010
    Post Count: 510

    Have security substitutions lost a lot of their value now since the gfc and change of credit policy? If you cannot substitute even a single security in and single out without having to do a full assessment again it seems its lost a bit of its power that it had previously

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi Wilko

    I agree it is a feature hardly worth mentioning these days as legislation has almost defeated the purpose.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of MosicLandscapesMosicLandscapes
    Member
    @mosiclandscapes
    Join Date: 2010
    Post Count: 73

    We did a simple security substitution in 2010, loan on property A which we sold and then transferred the loan to property B – no paperwork needed (which was good because our financials we rubbish at that stage having just started self employment).

    This was post GFC and really simple.

    Profile photo of wilko1wilko1
    Participant
    @wilko1
    Join Date: 2010
    Post Count: 510

    Hi mosics which bank did you use to do that?

    Did your original loan go into a term deposit first (as security) and then onto the new property or was it a same day  settlement 

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Given that the NCCP legislation didn't come in until 2011 this would have still been possible in 2010.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of MosicLandscapesMosicLandscapes
    Member
    @mosiclandscapes
    Join Date: 2010
    Post Count: 73
    wilko1 wrote:
    Hi mosics which bank did you use to do that?

    Did your original loan go into a term deposit first (as security) and then onto the new property or was it a same day  settlement 

    Same day settlement (which was the most difficult part of the deal). It was with Commbank.

Viewing 12 posts - 1 through 12 (of 12 total)

You must be logged in to reply to this topic. If you don't have an account, you can register here.