Selling a Crossed Property

Hello,
Has anyone had experience selling a crossed property were the valuation on the remainng property doesn't stack up?

eg 80% loan on 2 x 500k houses. 800k Loan
House 1 sells for $100k
House 2 gets a current Val @ 500k

Will the bank allow you to settle house 1 or will they refuse settlement unless you pay $300k?
Or is their some middle ground? eg offer to pay down 100k
Cheers

 

It is likely they will want $300k and potentially more if they can find a way to get it. That is the problem with crossed property - they control both properties and are the ones who will need to grant permission for house 1 to be sold and won't if they can't find another way to secure the funds owed.

 

They will refuse to release the mortgage until the loan is reduced to an acceptable LVR - 80% generally.

If your remaining security is worth $500,000 you would need to reduce the loan to $400,000.

 

This is the number one reason why you shouldn't cross collaterlise. The bank will ask you to reduce the remaining loan to 80% of the remaining security value or they won't allow the sale to proceed.

 

Yep agreed with Peter, this is why you shouldnt cross a property.

Long story short, you'd have to pay down your the remaining property so it's 80% of the value of the property, thus you should order a new valuation to see what the shortfall is.

 

This is the reason you don't cross secure.
However this seems to be an extreme example, is this just a hypothetical?

 

Thanks for the replies. Thankfully the earlier example was hypothetic and im actually asking for a friend anyway Its not an extreme example if someone brought in Port hedland or some Qld mining towns at the peak of the Boom, i saw places down almost 90% (Hedland has come back a bit though). If you crossed that with your PPOR in Perth you would not be happy if you wanted to sell either.

Would this example make any difference, closer to thier actual position?

Property 1 - $900k Originally Now Val say $650k

Property 2 - $100k Original now selling for say $80k

Loan was $800k but as old P&I has made it say $720k (so under 80% original val but over 80% new val even after the bank gets $80k from sale)

Yes I know crossing loans is stupid.

Any chance the bank would take just the proceeds or even an extra 10,20,30k extra?

Also would getting them to agree to take less have any future repercussions (credit rating etc)

cheers

 

it comes down to value of security compared to remaining loans.

 

Not a chance

Does your friend need to sell?
Where are these properties located?

 

Sorry, updated

 

Yeah he needs to sell, house is vacant and cant get tenants so likely to get trashed Some ****** dead little farming town