question about Cross collateralisation secured loan

Many years ago when I setup the loans for both owner and investment I have the intention in mind of setting up 2 loans as a separate loans but now I plan to refinance they told me that I have Cross collateralisation secured loan so I can't refinance just 1 of the investment loan.
I am also payout for my owner occupied so it is not worth it for me to refinance both.
So what are my options?
Do I wait to payout my owner occupied before I refinance my investment?
Do they release the property that I have payout?
Looking for profession advises. Thanks.

 

uncross?

Loan Tip: Uncrossing Crossed Colleralised loans Loan Tip: Uncrossing Crossed Colleralised loans

 

Hey there, You can likely refinance both, it'll just depend on the LVR. You can also refi just one if the PPOR has enough equity to support itself.

"They" likely are just trying to keep your loans

Do I wait to payout my owner occupied before I refinance my investment? Nope!
Do they release the property that I have payout? Yes, but not necessarily automatically.

 

When you say you have to pay out an existing loan, do you mean that part of your loans are fixed and there's a penalty to exit earlier?

You may need to refinance everything, but possibly not. It really depends on a number of factors and a detailed understanding of your finances are needed before a solution can be presented.

Best suggestion I can make is to engage one of the many brokers who post here to help you directly with specific advice.

 

My owner occupied only have about 10% to be pay off and I can do it within the next 6 months so it is not worth it for me to pay any valuation fee or discharge fee.
Do I need to pay discharge fee for them to release the security of owner from investment property?

The investment would be 80% LVR (what if the bank being too conservative and valuation much less?)

Where the LVRs are under 80% this is relatively easy to do.
How and do I have to pay 2x valuation fees? or discharge fee?

I want to refinance just my investment loan to a better rate (can get better rate for investment IO with Athena then what I have to pay now for PI).
What do I now? Fee expect to pay?

 

Both of my loans are variable.
I have made so much extra in the repayments and I will continue to do so and within 6 months I can pay right out for the owner occupied so only left with one investment loan.

 

To discharge a mortgage you will need to pay government fees as well as lenders fees. About $350.

If the investment is 80% LVR now it would be very easy to uncross, in fact even if it was 150% LVR you could still uncross it.

If you are going to refinance just do it all at the same time, uncross at settlement with the new lender.

 

Can I just ring my bank and ask them to uncross if both properties are 80% LVR?
Is there any fees for uncross? Thanks.

 

@abcdguy get a broker to help you. Assistance from a broker doesn't cost you anything. You're far more likely to get a better outcome using a broker for this than doing it yourself.

You keep on asking what fees there are. The cost depends on what the solution is. It depends on the lender you're with. There is no simple answer without a complete understanding of the problem and your circumstances.

 

ok. I will talk with one of broker here in my area. Thanks.

 

Yes and yes

 

Is this fee per loan account or per property?

 

per mortgage.

 

So one mortgage can have multiple split loan accounts but still have to pay only one discharge fee?

 

A mortgage is different to a loan. Mortgage is the security for a loan. Usually one lender will have one mortgage over one property

 

Discharge fees are usually applied on a per property basis. Multiple splits shouldn't matter.

 

Thanks @Terry_w and @Peter_Tersteeg

 

Terry, can you please elaborate on the above point? In my experience, the process in removing a security involves churning the facility and getting credit approval to do so, no one would approve the discharge if the LVR didn't meet our security appetite

 

Say there were 2 properties. Property A and Property B, valued at $100,000 each securing 1 loan of $100,000 and this loan was used to purchase property B.
The way to uncross would be
Property A secures $20,000 but the loan relates to the Purchase of Property B
Property B secures $80,000 and the loan relates to the Purchase of Property B.

So each loan is secured by one property, but they both relate to Property B.
Each loan could be at a different Bank too.

 

Counter to this, if there is plenty of equity in the primary security, a partial discharge of the secondary security is fairly simple. It usually only requires a single form and no application to churn.

Occasionally there's circumstances where I actually do advocate cross collateralisation. Family guarantees and bridging loans are an obvious examples. Done properly it's fairly easy to put a plan in place to remove the cross collateralisation when the time is right. Done badly without an exit strategy in mind, it can get messy later on.