All Topics / Finance / Cross collateralised Loan Payout Problem

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  • Profile photo of jambvjambv
    Participant
    @jambv
    Join Date: 2003
    Post Count: 44

    I have 2 properties on the one loan. Loan was 500k split evenly between the 2 props. I’ve now sold one for 350k & the bank wants to take 340k instead of 250k- 5 years of payments. What are my options?

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    Grin and bear it – this is why you never cross collateralise your properties.

    What is the remaining property valued at? Judging by the loan reduction amount I’m assuming they’ve viewed it’s valuation as 200k.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
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    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of jambvjambv
    Participant
    @jambv
    Join Date: 2003
    Post Count: 44

    Retail value of remaining prop is 360k with bank valuation of 330k.

    Profile photo of Ethan TimorEthan Timor
    Participant
    @ethantimor
    Join Date: 2016
    Post Count: 282

    Are you dealing directly with the bank? If so, you could ask them why they want to have the LVR so low. Maybe it’s a borrowing power issue?

    Ethan Timor | Aligned Finance Pty Ltd
    http://www.alignedfinance.com.au/
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    Active Investor & Broker; Based in Northern NSW, servicing Australia wide; Author of '34 Proven Ways to Maximise Your Borrowing Power' (download free from our website)

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

    Retail value of remaining prop is 360k with bank valuation of 330k.

    The bank will generally want to keep LVR at 80% – so if remaining property has been valued by them at $330k then remaining loan should be $264k. So if it was $500k initially – then you’d probably need to pay $236k…..so not sure why they’re asking you to pay $340k unless the property is in a high risk postcode with a restricted LVR

    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 TomTom
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    @thebeardedbroker
    Join Date: 2016
    Post Count: 10

    I assume you wrote the loan directly with the bank? You may be able get a broker on your team by providing written advice to the bank that they are going to represent you. Not sure they can do much in this case though.

    Tom | Voyage Wealth
    http://thebeardedbrokerwa.com
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    The Bearded Broker for Voyage Wealth - all things finance

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    As Jamie has noted based on that estimate bank value it shouldn’t be that low as uncrossing loans generally reduces the facilities to 80% of the remaining security. If it’s not a high risk postcode of security (with some lenders things like apartments or multiple dwellings on one title can reduce the LVR allowable).

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
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    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    I have 2 properties on the one loan. Loan was 500k split evenly between the 2 props. I’ve now sold one for 350k & the bank wants to take 340k instead of 250k- 5 years of payments. What are my options?

    Your options are limited as this is probably due to serviceability. Under the agreement you entered with the bank they would be entitled to retain the proceeds of any sale if they think you can no longer afford to repay the remaining loan. They have a mortgage and will only release the property if you accept this.

    But see a broker quickly because you may be able to refinance.

    This mistake of cross collateralisng loans will potentially cost you dearly.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

Viewing 8 posts - 1 through 8 (of 8 total)

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