Hi all
So I go in to the commonwealth bank the other day to apply for my LOC to use for my deposit for first ip.
They first ask me where I'm getting the rest of the loan for the ip , I tell them Bankwest.
They proceed to question me why I would not just go with them for the whole loan ect.
They tell me even if I had the loan with bankwest the banks could still put an injunction on your ppor if anything went wrong with the ip loan.
Is this just a con to get you to go with them?
What do you guys think?
Hi Evernat
It's a bit cheeky on CBA's part to encourage you to stay with them – but it happens.
You can have multiple properties with CBA that aren't crossed. If you take out a LOC against property 1 and use it as a deposit towards property 2 – the securities should remain uncrossed. If you do remain with CBA for both loans, check your loan offer documents to be certain that the properties aren't crossed- their should only be one listed security.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
it is in the bank's best interest to cross your loans – not in your interest at all.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Agreed, If you have enough equity to draw out into a LOC to be used later
for a deposit than do it. I don't know much about this industry but I have had my fingers burnt crossing before,
only because I didn't know enough about it. The posts your are receiving sound correct, listen to it.
Good luckI too have just taken out a second loan (LOC) on my PPOR in order to be kept in reserve for when I find a suitable IP.
It appeared there was some confusion as the head office wanted to know why I was not just doing a new loan once I found the property.. I stood firm, told them what I wanted and it was done. My only fear is whether it was correct for tax purposes to have it stated that the amount borrowed was intended for the purchase of an IP although apparently this is still considered 'personal use'. I made sure it was stated in notes that the intended purpose was IP (hope thats right).
I also spoke about the future loan and crossing. Again the loans manager said much like the above, it didnt matter, the bank would still have access to everything anyway. I mentioned difficulty in selling property or using equity in future, she continued that it made no difference and that what people say is not correct… I didn't know enough about why it important not to cross so I was unable to make a suitable argument.
either way I told her that when the time comes I will be insisting that it not crossed and she say thats fine, she can do either way!
They dont make it easy for newbies.
evernat wrote:Hi allSo I go in to the commonwealth bank the other day to apply for my LOC to use for my deposit for first ip.
They first ask me where I'm getting the rest of the loan for the ip , I tell them Bankwest.
They proceed to question me why I would not just go with them for the whole loan ect.
They tell me even if I had the loan with bankwest the banks could still put an injunction on your ppor if anything went wrong with the ip loan.
Is this just a con to get you to go with them?
What do you guys think?
Just because CBA want to write the loan it does not mean has to be crossed. If you get the line of credit and new loans un-crossed they are as good as being with a different lender.
A few things people should be aware of:
*The banks need a court order to sell your property – even if they have a first mortgage
*When the bank needs to collect from other assets e.g. get an injunction over other property, they need a court order whether the other assets are mortgage to them or to another lender. Therefore much of a muchness.Keeping the loans not crossed is the important part. This allows more flexibility to restructure your portfolio and enables you to control the distribution of funds received from a sale (rather than the bank). The benefits of splitting the lending between banks does not really add to the benefits of keeping the loans not crossed.
Intrigue wrote:It appeared there was some confusion as the head office wanted to know why I was not just doing a new loan once I found the property.. I stood firm, told them what I wanted and it was done.Good stuff. Just shows their lack of understanding of how to structure finances for investors. It's a good thing you knew what you were doing.
Intrigue wrote:My only fear is whether it was correct for tax purposes to have it stated that the amount borrowed was intended for the purchase of an IP although apparently this is still considered 'personal use'. I made sure it was stated in notes that the intended purpose was IP (hope thats right).As long as those funds are used exclusively for investment purposes than it's all good. Because you've got it set-up as a second facility it will be easy to track.
Intrigue wrote:I also spoke about the future loan and crossing. Again the loans manager said much like the above, it didnt matter, the bank would still have access to everything anyway. I mentioned difficulty in selling property or using equity in future, she continued that it made no difference and that what people say is not correct… I didn't know enough about why it important not to cross so I was unable to make a suitable argument.The reasons are endless – I've got a one pager that gives some excellent reasons as to why it should be avoided. Feel free to shoot me an email if you'd like a copy.
Intrigue wrote:They dont make it easy for newbies.Nope they don't – that's what us brokers are here for
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
You must be logged in to reply to this topic. If you don't have an account, you can register here.
