Removing cross collaterisation with CBA

G'day all,

I had an impromptu discussion with the local CBA branch manager whilst at the food court today.

Neither of us had all our questions and answers with us but it went a something like this.

At 80% LVR for the individual property "it was a sure thing" that the loan security could be removed and the property could stand alone. I was told that this was common practice when removing a guarantor from the loan (i.e mum and dad previously providing security to a child's house.)The bank may allow greater than 80% LVR on the stand alone properties, but this will depend on whether any LMI has been paid on the total LVR of the portfolio. If not previously paid, LMI may become applicable to the loans which become stand alone.

As expected, the CBA will not take into consideration the 100% offset money when it comes to attempting to get LMI below the 80% for a partial refund of previously paid monies. (For example; if you paid LMI on 82% LVR and you paid out this loan within 12 months, you would receive a partial LMI refund. However, if you place $100,000 into your offset account, the bank won't recognise this reduced LVR as this provides no security to the bank. Therefore no LMI refund if the loan still exists.)We didn’t have time to discuss costs etc. The conversation was quite quick, so I might not have heard all the answers correctly but it all seemed quite fair and reasonable There is light at the end of the tunnel. I intend on borrowing again before these ones get down to 80% LVR though.

Thanks for your help everyone.