i was wanting to find out if this is true. i understand cross collateralise and when you sell property a) the banks can with hold the cash to pay down property b) to stop this you don't cross coll. but my friend works at nab and says they have it in there policy that even if you have 2 separate loans they can still do this? is this common with most banks policies?
Yes and no. If you were at the point of bankruptcy they could potentially use their all monies clause - but realistically for a standard deal they most certainly DONT do this.
If you sell a property and the proceeds of the sale aren't enough to pay off the loan, the bank isn't going to release the security. They will postpone the sale until you come up with the funds to pay off the loan in full. For that matter, why would you agree to a sale price that puts you in a negative equity situation? Having houses reposessed is the thing that everyone fears, but it's also extremely rare. The reasons for avoiding cross collaterlisation have been well covered in the following thread: https://propertychat.com.au/community/threads/cross-collateralisation-10-reasons-to-avoid.153/
"all monies clause" thats what he said haha. yea right ok so the new changes to BOQ is that the same clause or is that different?
If the loans are crossed with the one bank - then there's a chance the bank will want you to pay down property B once property A sells (it depends on the LVR they want you to maintain). If both properties are with the same bank but aren't crossed - then providing the sale of property A is high enough to pay out the loan then they won't request you pay down property B. If there's a real concern of this happening - just use two banks for the two properties. Cheers Jamie
Yes the lender can control the surplus money on the sale where the loans are crossed. I have had 2 clients where this happened. Both were not working so the bank said (N..) you cannot afford to pay the loans so we will only release the mortgage on the sale if you pay down the other loans. Enough to ruin these people's retirement. NAB can still do loans without crossing them. I have a deal in now where I am uncrossing 4
I just uncrossed a loan securing 3 properties back out into 3 'split' loans. The bank has promised me that each split loan is independent and secured by only one property each. They have promised that I am able to sell one property, and only need to paY out that one split loan securing that exact property. I really hope they are right!
