Cross collateralisation

Discussion in 'Loans & Mortgage Brokers' started by Jacko, 19th Dec, 2019.

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  1. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    I don't think I've ever seen anyone with a cross collateralised portfolio loose everything because they defaulted on one loan. Defaulting and repossession is fairly rare anyway.

    I have seen plenty of people miss out on great deals, or ended up with an expensive loan that they couldn't get out of, or not be able to sell a property on their terms or plenty of other sub-optimal outcomes. All because of cross collateralisation.

    Cross collataterlisation in essence gives up a lot of control over your finances and your property portfolio. The whole reason for investing is to take control of your financial future, why would you willingly give some of that away when it costs you nothing to keep that control?
     
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  2. Jacko

    Jacko Well-Known Member

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    HI Beano, could you please help explain about the concept of inflection points? I'd love to hit an inflection point! Cheers
     
  3. Beano

    Beano Well-Known Member

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    The massive increase in profitability of property by the average person doing virtually nothing, with no special knowledge all while doing little work is something that may not happen again.(commercial)
    It's something that pretty well happen to everyone who brought in the early 90's. (And before)
    Yields were 12% to 20% net with funding at 11% to 13% and falling so when these loans are now about 4% ( interest ) and the rents have doubled profitability has skyrocketed!
    I would struggle to find anyone from this era earning less than 80% of the net rental today.
    Hence I chuckle when people say the sell down at retirement...people from era buy unecumbered properties in their retirement.
     
    Last edited: 4th Jan, 2020
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  4. Jacko

    Jacko Well-Known Member

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    Makes me feel so jealous:eek:
     
  5. Beano

    Beano Well-Known Member

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    But CG can be hard to work out as there are many factors that influence the value.
    The last 37 properties I paid over what a registered valuer valued the properties at and because I have not valued them since purchase I can't say if there has been CG (some commercial properties I have not had valued since the mid 90's ...the banks will not increase the debt without a registered valuation from a panel valuer)
     
  6. Sackie

    Sackie Well-Known Member

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    Because they are clueless.