G'day Brokers,
We have three properties all tied up with CBA. They are all cross collaterised. The PPOR has the equity. The second place is about 100% LVR and the third is over the 100% LVR. We had to pay some LMI due to the last purchase.
We've got a while to go yet, but just wondering at what LVR is it likely that CBA will allow these properties and loans to stand alone? Have you had much luck with the CBA when it comes to removing cross collaterisation?
Thanks guys.
Hi Fish
To be honest the way it has been structured i think you have absolutely no chance at all.
Sounds like CBA have done a good job in tying up your securities well and trully.
Maybe look to refinance and structure correctly. Starting again will be beneficial for you maybe not the Bank.
Richard Taylor | Australia's leading private lender
It depends on the overall LVR. If it is less than 80% on today's values you should be able to do it, but it will be painful dealing with them, the CBA that is.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Of course terry…
Which Bank? CBA
Thanks for your replies.
I just remembered the CBA lender making reference to "when the LVR becomes 90% on these two we'll be able to have these ones stand alone." Something along those lines. I might be off the mark though.
In hindsight, I should have prodded a bit better and tried to negotiate some answers at the time. I just didn't know that there were any other options.
Renegotiating will cost us a few deferred establishment fees + a few $ in the short term. Our LVR is under the 80% when including the PPOR 100% offset building up offsettting the PPOR loan.
We would like to buy again in the short term and will engage the assistance of a skilled broker next time (I was naive to think that I'd get a better deal by dealing with the bank directly.)
Thanks for your thoughts.
No worries Fish let us now how you go with them.
Richard Taylor | Australia's leading private lender
i have had dealings with the cba similar to yours once the lvr got down to 80% i was able to get them to stand alone.i then went to a different bank for my next purchase.i tried brokers and was stitched up with the wrong loan type paying monthly fees.from my experience with brokers i suggest you try having an informal chat to a loans officer from another big 4 starting with w bank i found them extremely helpful and more knowledgeable than my broker plus they are not as much commission driven
Thanks for your input Holdandrefinance,
I'll try and give them a call later this week to try and get a rough guideline of their policy. It will be a while though before we are at 80% LVR on the IPs. We would have to manipulate the PPOR offset money to bring the LVR down which is not a best case scenario for us. I think we'll just have to wait for some growth in the properties. It's encouraging to hear that they were willing to budge.
If I get a response from CBA, I'll try to add a summary to this post.
Whilst i am sorry to hear H&R dealings with a Broker were not the best remember if you approach the Bank themselves it is not in their interest to structure your loan in the manner you require.
One of the BIG 5 actually has it as a condition of their letter of offer that under the Professional Package 1 loan must cover all properties. A good independant broker with a few IP's himself surely has to be a better option.
Richard Taylor | Australia's leading private lender
Hi Fishgym,
I know with the CBA they have changed their lending policy to refinance / purchase to a 90%LVR, though if you are an existing client and looking at purchasing I know they will go up to 95% LVR.
As far as placing each loans to stand alone, more than likely they would have to be on an overall 80% LVR.
Talk to the loans manager or as mentioned even a few brokers on what loan structure you are after and how you would like to possition yourself for future investing.Regards
Rob Bologna
Dollar Wise Financial Services
[email protected]Thanks enaaja,
The 80% LVR seems reasonable to me. I am now hoping to call them early next week to obtain a summary from them. Ideally the funds that we have in a 100% offset would be taken into consideration when assessing our risk. Ideally, and reality, are two different things though.
Fishgym
Is the main reason you want the properties to stand alone because you are looking at selling or repurchasing?
Regards
Rob Bologna
Dollar Wise Financial Services
[email protected]G'day Enaaja,
The primary purpose would be to try and hurdle the wall that Comm Bank may put up when I wish to purchase again. While Comm bank is willing to lend me money, I have no dilemmas with the structure. As soon as they won't fund a purchase, my options may become quite restrictive. I'd like to keep my refinancing costs to a minimum. I can also imagine that Comm bank may slug me valuation fees each time on the properties.
Fishgym
just remember ,brokers have a vested interest in their comments as it can lead refinancing and commission.ask a broker to give you a rebate or refund for using their services and see what answer you get.whilst i am not a fan of cross collateralising if it means you get the loan isnt that better than not getting the loan????????i picked my brokers brains ,spoke to lending officers at different banks about loan types ,fees and conditions asked a lot of questions about lvrs then was able to and had the confidence to approach bankers on my own.the only way to get your lvr down is to pay off the capital or wait for growthDo we assume your Solicitor gives you back your legal fees if you sell your property in the first 18 months.
Or do you discount your own charges in business by 50% if someone asks you.Ask a broker to give you a rebate or refund for using their services and see what answer you get.
You have to be kidding me. Any broker that refinances for refinancing sake is to be avoided but given that some of the loan packages out there make it compulsory that the loans are tied together i hardly think your Bank manager is going to give you independant advice.
Thankfully most of clients buy more than 1 IP and we work together in building their portfolio.
It is not matter of taking a quick commission and leaving them to it.
Richard Taylor | Australia's leading private lender
Great answer Richard
The banks would definately not rebate when refinancing.
Most brokers are independant businesses who have invested interest in their client's, thus it would be silly to give misleading info or a wrong product just for commision.
The broker will lose more business in the long run.
My perspective with a good broker you build a great relationship, able to contact directly and work together to suit client's needs.
Bank manager, when you find a good one they end up moving to a new branch or company just when you start to feel confortable and are only able to advice on their companies product's to suit the companies best interest – even if their is better product out their.
I can go on and on but at the end of the day it is what you feel most confortable with.
If you are happy dealing with bank manager's and that is working – may as well stick to it on the other hand if you have a good broker which is working – stick to that also…Regards
Rob Bologna
Dollar Wise Financial Services
[email protected]ok…im starting to sh*t myself now as i have 2 INV properties cross collaterised with Westpac and have so for a few years now.
So after reading all the negative comments about cross collaterising, i decided to investigate on how to get them removed and separate.spoke with a Westpac guy and he said i need to refinance the current debt, and do 2 separate loan applications for each property, and he said thats all.
is that it………is it as easy as that???i do think cross collaterising is a good way to get the property, but i think you guys are right and down the track it can cause problems.
oh and i do think brokers are awesome and people should trust them just like the guys on this forum. only reason im not using mine now is for a totally different and way too long reason.
Unfortunately it is not as easy as your man at Westpac mentioned.
As i posted earlier several of the majors have "All money clause conditions" in their letters of offer and therefore splitting the portfolio is the only real way of safeguarding yourself.
Richard Taylor | Australia's leading private lender
I gave the Comm Bank over the phone lenders a call today. Unfortunately she didn't have a clue about any policy, procedures, or reasons why I would make such a request.
As per her advice, I'll go in and have a talk to the lenders at the local branch.
Will keep you posted if I get some rough guidelines.
Thanks Richard, but i sort of dont understand
you say the only way of safeguarding myself is by splitting the portfolio.
isnt that what i am going to do if i do 2 separate loan applications?
or again, isnt it that easy?
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