Cross collaterisation

Viewing 7 posts - 1 through 7 (of 7 total)

rip
Member
@rip
Join Date: 2004
Post Count: 17
January 12, 2005 - 7:23 am
Can anyone tell me whether you should cross collaterize your loans, some tell me yes and others no?
rip
Scremin
Member
@scremin
Join Date: 2003
Post Count: 448
January 12, 2005 - 7:31 am
Use the search button RIP. It will give you all the links to recent forum discussions. It saves everyone from repeating themselves as all you have to do is add you comment and the thread comes back up to the top.
Steph.
Success is 1% inspiration and 99% perspiration.
Michael Whyte
Member
@michael-whyte
Join Date: 2004
Post Count: 269
January 12, 2005 - 8:07 am
Stephs right,
And the quick answer is No. I can’t see any benefit in cross-collaterizing loans. This just gives the lending institution more immediate options in clawing back in the event of default. Best to protect your assets from each other so you can decide which ones to divest in a worst case scenario.
Peter Spann has a whole chapter on this in his book and goes to lengths to explain how to avoid cross-collaterizing.
Cheers,
Michael.
Robbie B
Member
@robbie-b
Join Date: 2004
Post Count: 2,493
January 12, 2005 - 8:13 am
I am totally against cross-collateralising.
It does have instances where it is needed though. An example is where you have one good and one bad security. To get the finance approved for the bad one, they will want you to cross-collaterlise.
The reason for this is that when properties are ‘crossed’, the lender, in the event of default and they take possession, has the right to sell ‘the most saleable security’ to recover their money. This means the good property will go first.
Avoid it if you can.
_____________________________________________
The poster formally known as The Mortgage Adviser
When I grow up, I want to be a Storm Trooper!
brahms
Participant
@brahms
Join Date: 2004
Post Count: 485
January 12, 2005 - 11:14 am
hi rip
avoid if possible, if not, build a bridge – 1000’s of people x-coll without issue without harm or harrassment.
cheers
brahms
mortgage broker
[email protected]
brisbane
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
January 13, 2005 - 1:12 am
It can be OK for two properties, but when you want to grow and get more, it will be a hinderance.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Click below to email me
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email Me
Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Derek
Member
@derek
Join Date: 2004
Post Count: 3,544
January 13, 2005 - 1:47 am
Hi Rip,
We initially ‘linked’ two properties some time ago to kick start things a little.
Since then everything has been stand alone as there is greater flexibility and it is easier for you, rather than the bank, to control your properties.
Derek
[email protected]
Property Investment Support Available.