Hi
Just bought our first IP and borrowed 110% from the bank using the equity on our PPOR.
I do not want to cross collate the loans but have no choice but to do it this way. I was thinking in a year or two of revaluing the IP and refinance , so I could stand on its own.
Any idea and thoughts about my plans , All input are welcome do and don’t , because I’m still learning.
Katsu,
That was exactly how I did it at first place. Using parent equity and bought 1st ip and now the ip is stand alone.
Kind regards
Chandara
[Keep going, you’re nearly reach the end of financial freedom]Hi all,
might be a dumb question, but it’s better to ask before i make the mistake…
What’s wrong with cross collating, if it’s from IP to IP? If all the IPs are held under the same name whether it be personal or company/trust etc.? can’t the banks take charge of all the IPs under the same name anyhow?
Cheers
Richard
Yes, they can. One of the main reasons against cross-collaterising is that it makes future re-financing for further purchases more difficult.
It’s best not to give banks any more security than you need to.
Rod.
Agree,
Plus securities within the same lenders grasp will always be assessed at an interest rate 1-2% above actual for ‘safety’ whereas loans with other lenders will be taken at face-value repayment commitment. Stupid but that’s the rub and it’s crazy to give up serviceability if you don’t have to. Also often the bank that had the best deal in town 12 months ago, doesn’t anymore and why pay more interest than you need to?
Cheers,
Mel
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