I was reading in one of the threads that someone mention that if the properties were cross-colateralised that all properties might have to be sold if you want to sell one.[confused2]I may have read this wrong so if anyone could clear this up that would be great.
D.B.
Absolutely not.
If xcoll and one is sold then some of the proceeds might be required to bring the existing LVR down to 80% or below.
It isn’t the evil many make out but it can make a bit of extra work at some point.
Please don’t worry too much.
Cheers,
Simon Macks
Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Advantage of Xcoll is no Mortage Insurance and perhaps more borrowing power.
hrm
Hi,
The situation described sounds like guarantors having their property sold when offered up as collateral for another’s property. In that case, if the sale of the property for which you’ve gone guarantor doesn’t satisfy the loan requirements (LVR for example) then either additional cash will need to be put in or the other property can be sold. This generally only happens in the case of a mortgage going into default and the bank has to sell off the property to make back their money.The moral of the story: Don’t offer your house up as collateral for a poor investment. But that is no different from conventional wisdom.
You might want to consider changing the securities on your properties when they have enough equity in themselves to cover the LVR that the bank requires, there’s usually a small fee for doing so but then as time goes by you know that you don’t have to worry about things being tied up together if/when you decide to sell.
Regards
JudyThe banks don’t seem to like taking securities off but I’ve found if I’ve got an accurate valuation and threaten to go elsewhere if they don’t then they comply.
We’ve just refinanced and uncrossed the properties as well as paying out one in full for future loans against it..
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