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  • Profile photo of BecBec
    Participant
    @beckyb
    Join Date: 2018
    Post Count: 6

    I’ve enlisted a broker who is supposedly investment portfolio savvy but he’s suggested I refinance both my existing IP loans with a new purchase and LOC for fourth in a cross-securitised bundle with cba wealth package.
    From what I’ve learned this seems like a bad idea and more likely motivated by commissions associated with bundling everything together.
    What do people think?
    And why is it that every broker I speak to seems to suggest the cba wealth package?
    Many thanks!

    • This topic was modified 5 months ago by Profile photo of Bec Bec.
    • This topic was modified 5 months ago by Profile photo of Bec Bec.
    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 11,992

    Hi Bec

    Yes i must in 28 years of mortgage broking i think i have only suggested to 1 client they cross collateralise their home loan and that was largely due to a LMI saving.

    Some Brokers like to recommend the strategy it as it makes refinancing down the track a lot harder and of course if you don’t refinance the preservation of their income last longer.

    In the current climate i think i would run a mile if that was your Brokers recommendation.

    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 TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,110

    As a broker and lawyer I would suggest you avoid setting up your loan in such a manner. Commissions don’t change if loans bundled together but there are brokers out there that just use one particular bank and/or product so most of their clients go into the same bank and product. Saves them having to think too much.

    Cross coll can be useful in limited circumstances, but not in this situation.

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
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    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of BecBec
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    @beckyb
    Join Date: 2018
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    Thanks very much for the advice. I thought as much. The issue is he got me to sign a waiver that I have to pay $1000 if I don’t choose to proceed. Do people think I ha e a good case for the ombudsman given that the proposed structure is clearly not in my best interests? Thanks in advance

    Profile photo of BecBec
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    @beckyb
    Join Date: 2018
    Post Count: 6

    Also, although the overall commission rate of 0.77 doesn’t change with bigger loans, the overall amount does if I proceed with two refinances instead of just one.
    The other issue was he didn’t even mention the cba refi rebate and only requested it for me when I explicitly asked.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,110

    The commission has nothing to do with the crossing, but if you refinance he would get a bigger commission because of the bigger loan.

    You signed a contract to pay him, not sure what the ombudsman could do. Why not just instruct him what you want and tell him to do it – no crossing. You are the client and borrower. And don’t go signing anymore contracts!

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
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    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of George PoullosGeorge Poullos
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    @york-p
    Join Date: 2015
    Post Count: 10

    Crossing securities is rarely the solution. The same result can be had by not crossing, which would give you more flexibility generally speaking. Ask him why he can’t still access your equity required without crossing securities. He should be able to answer immediately.

    Seeing as you’re not comfortable with that structure, tell him. It is your choice at the end of the day. He’s a credit advisor – not a credit forcer. He cannot force you to use that structure if you’re not comfortable.

    George Poullos | Precision Funding
    http://www.precisionfunding.com.au
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    Finance Strategist & JP

    Profile photo of Jamie MooreJamie Moore
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    @jamie-m
    Join Date: 2010
    Post Count: 5,065

    From what I’ve learned this seems like a bad idea and more likely motivated by commissions associated with bundling everything together.

    Hi there

    Best to avoid crossing – it can cause a real mess.

    Having said that – you can have all loans with the one lender and keep them uncrossed. It’s quite easy to do.

    Let your broker know if you’re unhappy with the structure he/she has outlined. The $1k fee seems a bit rich if they’re providing you with poor structure advice.

    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 BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,325

    Hi Bec,
    It may be you have come across this already, but if not, I didn’t want you to miss it, as the post linked below guides you to other threads that get into “What does and doesn’t work with x-coll!”

    https://www.propertyinvesting.com/topic/4410491-the-big-picture-for-new-readers-especially/#post-4697974

    Benny

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

    Agree with the above.

    I get why the broker wants to avoid time wasters by locking them in with $1000 fee if not proceeding. It’s steep and we don’t do it but I get it.

    That said, there’s probably nothing there that says you have to accept his suggestion to x-coll. So you can simply go back to him and let him know that you want to proceed but as standalones. He may object (don’t know why, but saw it happen) but doubt he’ll outright refuse. Bottom line is that he can suggest whatever but you’re the client and you’re giving him instructions. Not the other way around 👍😎

    Please do come back and tell us how it all worked out.

    Best regards,
    Ethan

    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 BecBec
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    @beckyb
    Join Date: 2018
    Post Count: 6

    Thanks for all your helpful input.

    I have absolutely no faith in the broker but am now just proceeding with one refinance so as to avoid the $1000 penalty. (I went with the Australian Lending and Investment Center, which is clearly just a huge machine driven by maximizing profit, despite all the advertising hype about how they are dedicated to the ‘customer relationship’).

    The whole process has dragged on for months now and my hope of finding a mortgage broker I can trust has still not been fulfilled. I’m now tempted to go back to my original strategy of dealing direct. Ideally I’d love to learn how to be my own mortgage broker. Is that possible? I’ve educated myself with all the generic basic property investment info but am struggling to find access to a deeper level of information to increase my confidence in decisions moving forward. Any suggestions much appreciated :-)

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,110

    my hope of finding a mortgage broker I can trust has still not been fulfilled. I’m now tempted to go back to my original strategy of dealing direct.

    Are you saying you can’t trust any of the 5 or so brokers who have replied above?

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

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

    Profile photo of BecBec
    Participant
    @beckyb
    Join Date: 2018
    Post Count: 6

    No Terry, I’m saying I don’t know how to determine who to trust

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,110

    Well, the broker should give you reasons why you should do what they are suggesting and these reasons should be logical and backed up with reasons

    e.g. why should you avoid cross collateralisation of securities? Because it gives the lender more power when things go wrong. This is because the lender will have 2 securities for 1 loan. Also it is totally unnecessary with the same amount of borrowings being achievable without crossing.

    Lender choice is more subjective and the effect if you get it wrong is not so bad as you could move across to another lender (if can still service!).

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

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

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

    It’s like with many other professions.

    How can you be certain your solicitor isn’t dragging the procedures, all in order to get more billable hours?

    How can you be certain your mechanic isn’t neglecting certain aspects or inflating other issues so he could profit more from you?

    How can you know your tradie isn’t working slower than he can or recommending work or repairs that aren’t needed?

    Etc etc.

    The answer to all of the above is trust.

    Either you deal with people you trust or you don’t.

    Gut feeling plays a big role here.

    One can’t be a solicitor, a broker, a mechanic, a tradie (etc etc) all at the same time but if you really think it’s best, you are most welcome to become a broker. There is time and money needed to setup and also on annual basis + 20-25 hours CPD training p/a + some lenders are not fond of brokers submitting their own loans but hey, it can be done 😊

    My suggestion? Interview more brokers and see which ones you feel will serve you best.

    Good luck! 👍😎

    Ethan Timor | Aligned Finance Pty Ltd
    http://www.alignedfinance.com.au/
    Email Me | Phone Me

    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 BecBec
    Participant
    @beckyb
    Join Date: 2018
    Post Count: 6

    thanks guys – really appreciate your feedback :-)

    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,325

    Hi Bec,

    Ideally I’d love to learn how to be my own mortgage broker. Is that possible?

    I’m sure it would be possible, but that would happen better if you were dealing with someone who has a wide knowledge of Broking in the first place. Terry, Richard, Ethan, Jamie and George have all shown they know the “ins and outs” of broking to a very detailed degree. Surely these are the people to learn from…. The thing is to find someone who exhibits this knowledge, and who seems to “speak your language”, meet with them, do a deal or two with them, and along the way, discuss with them all of your concerns and short-comings of knowledge.

    If you have deals that are a little out of the ordinary, learn from them how to handle these things even as they earn their commissions. Call the commissions your “education fee” (that you don’t even pay usually). Discuss with them how they got started, and even ask what they would suggest for you if you wanted to “go direct”. I am sure you could do it, but how much would you be risking by going direct without first learning from those who know?

    One of my fave mantras is “If you think education is expensive, try ignorance!!” :)
    Good luck with your journey,

    Benny

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,110

    I became a broker because I wanted to get paid for my own loans. But these days it would cost you around $10k to $20k to become a broker plus the ongoing costs would probably make it not worth your while unless you wanted to start a business.

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

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

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,110

    Forgot to add, these days brokers generally can’t even submit their own loans.

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

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

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