Changing security

Discussion in 'Loans & Mortgage Brokers' started by standtall, 31st May, 2022.

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  1. standtall

    standtall Well-Known Member

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    Quick question:

    Does changing the security property behind a loan breaks the Fixed loan contract? Bank in question is HSBC.

    Cheers
     
    standtall, 31st May, 2022
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  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    The loan can stay as is with a different mortgages to secure it
     
    Terry_w, 31st May, 2022
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  3. standtall

    standtall Well-Known Member

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    That's what I thought. I think broker wanted to get out of having to change securities.
     
    standtall, 31st May, 2022
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  4. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Is the LVR same or lower, and are the loans and security in the same names ?

    ta
    rolf
     
    Rolf Latham, 31st May, 2022
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  5. standtall

    standtall Well-Known Member

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    Same names but LVR would be higher (still 60-70%). I had used equity from other properties to finance new ones and now they have grown 40-50% so thinking of moving loan securities to respective properties to simplify things.

    I remember you could do it via Netbank with CBA and it would trigger valuations etc..
     
    standtall, 31st May, 2022
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  6. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    If the end lvr is higher than initially approved , most lenders will want a new credit assessment, so its not a " simple" port but more like a full app or close to

    Especially so if one has sold an investment property and the income is now lower ( which it sounds like it isnt the case with you).

    ta
    rolf
     
    Rolf Latham, 31st May, 2022
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  7. Balman

    Balman Well-Known Member

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    Tagging onto this thread as my question is similar, thanks

    Scenario - Obtained a LOC on PPOR to purchase numerous properties. The said properties now have built up equity. What I would like to do is basically increase/ take out separate loans for for the proportion used of LOC against each investment property and pay of LOC so the PPOR becomes unencumbered (if that makes sense).Question is how easy is it to do this ? the investment properties are on a fixed rate loan so ideally looking at getting 2 loans per property.

    Thanks
     
    Balman, 12th Jun, 2022
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  8. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    " easy" as long as servicing and vals met

    Full application for each one with the existing lender that has the underlying fixed rate loan

    ta
    rolf
     
    Rolf Latham, 12th Jun, 2022
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  9. Balman

    Balman Well-Known Member

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    Thank you. Then in my case its not going to be 'easy' as serviceability will probably be an issue with the recent increase in interest rates
     
    Balman, 12th Jun, 2022
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  10. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Same lender for the LOC and the fixed rate loans ?

    ta
    rolf
     
    Rolf Latham, 12th Jun, 2022
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  11. Balman

    Balman Well-Known Member

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    Yes. Thanks. No cross-coll too.
     
    Balman, 12th Jun, 2022
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  12. standtall

    standtall Well-Known Member

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    Update on my original query: Valuations were ordered couple of weeks ago and securities are now being changed. No assessment or anything else was needed as long as LVR for all properties remained under 80%.
     
    standtall, 12th Jun, 2022
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  13. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Assuming the loan names and security names are the same across all props, one can usually get a port of the LOC done.

    Much depends if lifting the debt off the PPOR is a "clean freak" emotional thing OR u actually want further borrowings, ie reuse the now empty LOC for shares or the like.

    There the port may allow you to refinance the PPOR to get the loc equialent back with a higher servicing lender

    ta
    rolf
     
    Rolf Latham, 12th Jun, 2022
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  14. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    There is a tax issue to consider too as the LOC is a mixed loan so you would need to split it first.
     
    Terry_w, 12th Jun, 2022
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  15. Balman

    Balman Well-Known Member

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    Thanks .

    the LOC in this case has solely been used for the properties with fixed amount allocated to each property .
    Also once the LOC if approved is allocated then closed by the bank , there os likely no chance of obtaining another one as LOC are redundant .

    As Rolf asked in my case for the near future lifting the LOC is clearly and emotional thing as I would like to have the PPOR unencumbered . However if in the next few years I would consider investing again it may not be available . So a double edged sword .
     
    Balman, 12th Jun, 2022
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  16. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    It is a mixed loan still if it has been used for more than one investment. This means you should refinance it and split it in one hit to maintain deductibility. If you increased the loan on investment property A by the amount used and paid it into the LOC you would be reducing debts of all the other uses too.

    Best to seek your own tax advice.
     
    Terry_w, 12th Jun, 2022
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  17. Owlet

    Owlet Well-Known Member

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    Can a change in security occur using an existing property on the lenders books? Lender has property A and B. Property B is sold. Can the loan be kept by using property A as security?
     
    Owlet, 12th Jun, 2022
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  18. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Yes as long as the LVR is acceptable
     
    Terry_w, 12th Jun, 2022
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