Hi,
Can someone explain to me the issues surrounding cross-collateralisation? I am aware there are problems with discharging loans if multiple properties are used as securities with the one lender, but what other issues are there?
Happyjack72
hi happyjack72
cross-collateralisation is a problem on a couple of fronts.
banks love to in some peoples words screw you so the more control they have the more they screw.
I get my lending from lots of different banks. and each project is stand alone.
the next guys who also line up are with there hands out usuallty for the throat as they take no prisinors are the wigs they skin you if they can.
so to get away from this you try not to cross-collateralisation as then they don’t know and you try to put up as many screens, wall a moat if possible around your investments to keep this guys out.
If you need a bank or lender you set up you investment as a single stand alone deal with (in my case a company and trust under but yours could be different)a structure and then lend to that and only that investment and keep all others at arms lenght.
I currently have loans with hsbc,suncorp,anz,nab, and two different private lenders and they only work on the projects in there deal.
I get the best deal at the time and the last one that exchanged yesterday was one of the best to date and that was nab.
investing is only part of the job the hardest part is holding, growing, and perserving the investment and with they way that every goverment federal and state is concerned we are the bunnies and there are the wolves so start digging that moat.here to help
If the bank forecloses, then they can sell your mortgaged property. If you were not cross collateralised, they would still chase you for any shortfall, but you would have the option of raising the money elsewhere.
Another point is, if you current lenders stops lending to you, it can be harder to go elsewhere if all your properties are tied up.
Terryw
Discover Home Loans
Parramatta
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi,
I made the mistake of collateralisation 3 properties afew years ago.
Is there a way to undo this mistake and at what cost??
Should I just appproach my current lender and see what they say ??or do you have to take a different approach??
Any help would be appreciated.
Paganpagan
why was this a mistake?
lots of people are down on x-coll but the reality is that its a common practice which suits many circumstances (hence its a common practice).
to be quite specific what are your future plans and present situation that you now deem your decision to x-coll ‘bad’.
cheers
brahms
Purveyor of Fine Finances
aka Mortgage Broker Brisbanehappyjack
you just need to do a partial discharge of mortgage – usually comes with a $300 or so fee – which is reasonably inconsequentual.
so long as the ‘new’ transaction supports itself at 80% lvr no LMI payable, easy peasy..
cheers
brahms
Purveyor of Fine Finances
aka Mortgage Broker BrisbanePagan,
As brahms alluded it is not the end of the world.
If each loan is lower than 80% of the property value then your lender should be able to unxcoll them.
I wouldn’t panic however if not.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[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.
I would recommend that you sit down with a mortgage broker and go through your existing structure. They will then advise you on the options available to you with your existing lender and also with other lenders to give you the full picture.
Anita Marshall
Advanced Finance Solutions
http://www.advancedfinance.com.au
[email protected]
Pagan
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