Multiple disadvantages, no real advantages.
If one property goes up 10% and the other down 10% – no equity release for you.
If you use lenders mortgage insurance you’re up for significantly higher costs.
Utilising a single lender is a great way to run out of borrowing capacity exponentially faster, by crossing up your initial portfolio you make it difficult to unravel in the future, potentially cutting your investment potential short by as much as 50%.
Upsides: Slightly less paperwork for the person putting the loan through.
I’d much rather unlock the absolute most potential for investing as possible, than be lazy and hand over flexibility and any ability to keep an agile and evolving finance structure.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
by doing what you suggest you are cross collateralising the securities.
Yes, correct. However, given that I’m working for a bank and not multiple (brokering) I guess it doesn’t matter too much considering the bank will hold both securities anyway. Still some disadvantages but very minor.
Thanks,JDIt would be in the lenders best interest to take as much security as possible from the client and to also tie them up making it more difficult to refinance and leave the bank.
For the client though it would be in their best interest to avoid giving too much security and to being tied up.
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
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