Escaping cross-collatorisation

Hi all

I have found and joined Property Chat in the hopes someone can assist with any advice.

We find ourselves in a situation where we need to sell our properties and we are trapped by cross coll. We have 2 investment properties and one owner occupied.

ANZ has told us of course we can discharge all loans... if in the process of selling 1, we keep the other two above 80% LVR, then sell next, etc etc.

Unfortunately all 3 properties were purchased when the market was on the way up.... 2013/2014 then it tanked in Perth. It’s still rubbish.

Position is as follows:

Home: approx 105% LVR
IP 1: approx 85%
IP 2: approx 120%

My question is, is there ANY way we can get out of this? Other than large cash injection from our pocket. Do banks ever allow some sort of bridging loan or line of credit to allow us to sell the properties then clear the debt? So they are somewhat protected in the selling process?

Would a guarantor remove the need to hit 80%?

We can afford to completely clear our debt with ANZ by selling the properties and stumping up cash.

We can not afford to stump up cash to square debt AND huge amount to get to 80% LVR during sale process.

I hope this my ramblings make sense and hopefully someone has some suggestions for us to get out of this mess.

thank you!

 

550
300
325

 

And how much cash do you have?

What did the bank say they would do if you sold one?

assuming value / loan of 540/550, 350/300 and 265/325, total 1155/1175. Thats >100% lvr anyway. Including costs you will need to put some cash in anyway to get out.

 

$50k

 

The bank won’t discharge the mortgage if we sell one unless we come up with (from memory) approx $120k cash to take the others to 80%. But we don’t have that much cash. Is there ever another option? Bridging loan? Guarantor? Do we have to go through hardship team?

Finding it difficult to speak to the appropriate people at the bank or someone who knows the answer

 

There seems to be barely enough cash to sell everything and clear the mortgages.

 

Yes it is ouch, thanks ha ha...

But we are young, will do better to sell all even front up the $30k to clear it... but how.

We don’t need to space out sales, no. But very hard to sell all 3 at the exact same time? Cross collat loan - can’t just discharge one unless we sort out the others.

 

Yes it’s tight. It would literally be just closing out the accounts. We do have access to other funds via family if we really need but not 100s of thous.

In any event I appreciate the responses to my post, but no one has answered my query as yet. How we clear the debt after sale isn’t really relevant. It’s how can we sell without having to pay down the debt beforehand.

 

What are you trying to get out of?

 

? Sorry I don’t understand the question? We are trying to sell 3 properties which are encumbered by cross collateralised loans.

 

I see now. The only solution I can see is to have settlment occur simultaneously or borrow from a related party until they all settle - which could be risky for them

 

A security guarantee could work too

 

Thank you.
We think a loan may be the only option too. I was hoping there would be some tried and tested method of the bank “helping” in some other way for these situations but I appreciate that leaves them potentially exposed and why would they.

Settling all 3 properties at once seems like a difficult task unless it’s a fire sale.

Thanks for taking the time to read and reply.

 

BTW I think ANZ refund part of the lmi if a loan is paid out within a short period such as 6 or 12 months. Might help a bit.

Wonder if you could valuer shop and find a lender where the loan word be 80% lvr on one or two or even all of them and refinance, perhaps with reducing loans with cash as well

 

If you have serviceability maybe try refinancing some of the loans to other bank or even 2nd teird banks or private equities? At least it gives you a bit more time to sort it out.