Loan Porting / Security Substitution

Discussion in 'Loans & Mortgage Brokers' started by GazCava, 3rd Jul, 2020.

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  1. GazCava

    GazCava Member

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    I would like to know if anybody has had any experience with porting an investment loan with the ANZ from one property to another?

    I have sold one property that is currently securing my loan. This place will settle and then 20 days later I have another property that I have exchanged on that is due to settle. I would like to know if this process is possible, given that the settlement dates fall on different dates? I was told once that the settlement dates needed to fall on the same date for this to be possible. I have since been told that this swap in securities will be possible, pending valuation of course, even with the different settlement dates.

    Does anybody know if it is possible and if so would a security deposit be used to secure the loan for the 20 day period?

    If a security deposit is used, does this need to be provided before the settlement / discharge of the first property settlement, or can the funds from that sale be used as the security deposit?

    I might be dreaming that a security deposit is even required. It is just that there is a 20 day difference in the settlement date and I do not know how the bank will deal with this?

    Any experiences with Australian banks with this process will be appreciated. Of course, an experience with the ANZ with this process would be perfect.

    Thanks in advance!
     
  2. Terry_w

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

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    See if they will hold cash as security. This could be cash from the settlement. There will definitely need to be some security for the loan otherwise they will not discharge the mortgage
     
  3. GazCava

    GazCava Member

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    Cheers. Yes I have had a person within the "settlement team" at the bank mention the security deposit and I did assume that this could be cash. I'm just not sure how it would work ie could the cash from the sale of the property, that is equal to the loan amount, be used to secure the loan? ie the amount of the loan, from the sale, not be used to close the loan, but be used from the sale to then secure the loan and keep it open? Thanks
     
  4. GazCava

    GazCava Member

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    I believe you answered my reply in your first message, so disregard my previous reply to your comment. And thanks again.
     
  5. Terry_w

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

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    Example
    $400,000 loan on a $500,000+ property. Loan Secured by the property which is sold.
    At settlement bank retains $400,000 in a term deposit with the loan of $400,000 remaining in place.
    As the new property comes to settle - assuming it is worth $500,000 or more, the bank will take a mortgage and then release your $400,000 cash - which could be used for settlement.

    Note the potential deductibility of interest issues if the new property will ever be rented out.
     
  6. GazCava

    GazCava Member

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    Yes this will be a perfect scenario. Thanks for taking the time to reply. I have been thinking that this approach would be the logical thing to do. Hopefully my bank shares this logic.
     
    Terry_w likes this.
  7. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    TD as mentioned by TW

    Simple but can have a few fleas

    old and new property typically need to have same names on title

    End lvr of old to new property must be the same or lower, otherwise a new application will be required.

    ta
    rolf
     
    beachorbust likes this.