All Topics / Help Needed! / Cross-security question

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  • Profile photo of bm17bm17
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    @bm17
    Join Date: 2010
    Post Count: 47

    Hi all,
    Been a little while since my last post but I was hoping to get some of the very qualified broken feedback on a question I have about cross-security.

    I am looking at refinancing my 3 properties (2 investment, 1 PPOR) and wanted to ensure I did not get locked into having these cross securitised. My situation at the moment is all 3 properties have different lenders (ING, Westpac, ANZ), with each property acting as security for one loan only (i.e. properties are not cross securitised).

    My questions is, if I was to refinance and put all loans (and therefore all properties) with one lender, but had separate loan accounts, would this result in cross-securitising the properties? I imagine the new lender would want to take all three as security to reduce their risk but was wondering if this could be avoided?

    If anyone had any feedback on the best way to approach this that would be greatly appreciated!

    Profile photo of Don NicolussiDon Nicolussi
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    @don
    Join Date: 2005
    Post Count: 1,086

    BM 17 – your question seems really just double checking your gut instinct – which is correct. Yes you can keep your loans separate at the one lender. No problem. However, with the structure you have now I am guessing that the reason you want to move is price or rate. Serviceability (or the way banks calculate what you can afford) will be slightly different across a panel of lenders. With multiple properties a consideration is whether the bank will use your actual repayments to calculate your affordability for a new purchase (or the refinance) or their assessment rate.

    Don Nicolussi | Mortgage Broker - Home Loan Warehouse
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    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    Yes can keep loans with same lender without crossing.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Profile photo of Jamie MooreJamie Moore
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    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    If you simply replicate the same structure you have now with the next bank and you’ll avoid crossing.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
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    Profile photo of RickRick
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    @rixter
    Join Date: 2003
    Post Count: 15

    You can refinance all loans with the one lender. Just check your loan docs before signing one property is securing the loan. In my opinion having the properties spread across multiple lenders as you have it now is best for minimising your exposure risks.

    • This reply was modified 5 years, 1 month ago by Profile photo of Rick Rick.

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    Profile photo of bm17bm17
    Participant
    @bm17
    Join Date: 2010
    Post Count: 47

    Thanks everyoe for your comments, very useful.

    Just another quick qestion, if I was going with a single bank, would I do a single application for the total loan amount and then split the accounts, or would it need to be 3 separate applications (i.e. one per property)?

    Thanks again.

    Profile photo of Jamie MooreJamie Moore
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    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    3 separate applications. More work but better outcome.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
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    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of Tom@SadhanaConstructions[email protected]
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    @spartantom
    Join Date: 2015
    Post Count: 18

    If you’re simply chasing a better rate it may pay for you to consult with your broker about having the banks reprice your loans, or if you don’t have a broker talking direct to the banks.

    The banks are very competitive at the moment so you may find that if you suggest you’re leaving them for another lender they may well match the rates or come close to it.

    [email protected] | Sadhana Constructions
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    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
    Join Date: 2003
    Post Count: 12,024

    There are many factors to consider as the features required for an IP loan are different to a PPOR loan.

    The 3 lenders you have mentioned are not ideal for a rate sensitive client and I am sure you could do better.

    Would be looking at 3 separate applications especially if you can get some of the fees waived.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
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