Hi guys
I'm posting this on behalf of my brother in law. I would appreciate any help/ideas/assistance. We are both stuck on this one!
I'll keep this as simple as possible.
Property 1 – Value is 600k. Paid off no loan.
Property 2 – Value 300k , 344k loan
LOC – 50k (has not been drawn down at all)
Bank has Property 2 secured against Property 1. My brother in law wants his title deeds back and to purchase Property 3 in next 6 months.
Can anyone comment on how structure the loans, the bank has said he cannot get his deed back for Property 2 untill the loan is reduced to 80%. His focus is to borrow funds to purchase property 3 whilst trying to get out of the cross colatteralising.
What would you do??
Thanks guys!
Try the following. Refinance property 1 and 2 as follows:
Property 1 – borrow upto 80% or 154k assuming increase in net debt
Property 2- borrow 80% to 240kAbove assumes full doc and deal services. Also split property 1 and property 2 between 2 different banks. You should not put all your eggs in one basket
THanks Sprirro however I'm not sure I understood that.
How are you able to borrow against Property 2 when it's loan is more than it's value?
Hi Kyan
No what he would do is reduce loan on IP1 to 80% of the market value and take suplus borrowing on PPOR.
I have another forum client who was in exactly the same position with his Bank who we are working with at the moment.
Seems to be a common thread than Banks like more security than necessary.
If in doubt get him to contact a mortgage broker au fait with securities and structures.
Richard Taylor | Australia's leading private lender
Also as soon as a Borrower looks like refinancing the original banks retention center will try to keep the business and should be more willing to be helpful.
Not if it is done by way of Rapid Refinance using Title Insurance they wont even know about it until it has happened.
Richard Taylor | Australia's leading private lender
Just a quick point – it does not matter if the loans are split between one bank or two – property 2 value is insufficient to support the total debt.
You have 2 options;
1: restructure all debt to be secured against property 1 (get the title back for property 2)
2: have both properties supporting the debt (as you do now)If you choose option 2 you can split between 2 banks or keep with 1. Regardless which way you go both properties will be mortgaged and titles will be held by either one or two banks so you will not free property 1’s title.
Why not just save on fees and keep these two cross collaterailsed for now and get an incease for the 20% deposit ?
This will avoid the refinance costs and still allow you to buy another property… Unless there is a deeper reason you can’t get approved that you have not mentioned.
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