Loan Tip: Securing More than One Loan on One Security is Not Cross Collateralising

Discussion in 'Loans & Mortgage Brokers' started by Terry_w, 21st Oct, 2020.

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  1. Terry_w

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

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    As described last time, see Loan Tip: What is Cross Collateralisation? , Cross Collateralisation is where more than 1 security is used for one loan.


    Securing more than one loan against the same property is not cross collateralising. Collateral refers to the mortgage as security for the loan, not the loan itself. Therefore cross collateral is mixing 2 securities for the one loan.

    It is perfectly fine to have many splits secured against the one security property – and is good practice.


    Example

    Homer has a main residence securing 5 loans

    upload_2020-10-21_11-24-34.png


    No cross coll going on here!
     
    Terry_w, 21st Oct, 2020
    #1
    craigc, Simon Moore and Labuku like this.