A refinance and a release

[kissfan]

Hi all.

What is the scenario when lender A has security over two properties (separate loans) and lender B is taking over the loan but only one of the properties. I.e, the properties have gone up in value enough for the new lender to only need the one property.

Is the second property automatically released?

Wasn't going to get a solicitor/conveyancer to get involved as I thought it would be a fairly straightforward procedure. I spoke to someone at the Land Titles office and they said to just inform the bank (releasing) of what's going on and all should be ok, but thought I'd ask the knowledgable folk here.

Thanks
Marty

 

[knightm]

Go to lender A and tell them that they do not need 2 securities any more because they have grown so much. They will want to value at least the property that you are saying they can keep as security. If it comes in high enough for them to release the other one, they will.

 

[GoAnna!]

Not sure where you are in the process but I would start by having bank A revalue the property you intend to leave with them and if the valuations come up sufficiently high as security for the loans ask them to release the other title.

This gives you a free unencumbered title you are free to frame and hang on the wall or take to another bank to offer as a security for a mortgage.

If the valuation does not stack up you may need to pay them some cash out of the settlement with Bank B to make the LVR work.

 

[kissfan]

Go to lender A and tell them that they do not need 2 securities any more because they have grown so much.

Not sure where you are in the process but I would start by having bank A revalue the property you intend to leave with them and if the valuations come up sufficiently high as security for the loans ask them to release the other title.

Thanks knightm & GoAnna for your replies.

Am definately refinancing, have only just started the process. Not worried re that side of things, have done so quite few times in the past.

Was/am trying to see what happens to the second property when the refinance settles. I would have thought that the title is automatically released. Being a Qld property, my understanding is that titles are now recorded electronically. If that is the case, who has to inform the Land Titles office. I would imagine that the bank releasing both titles are supposed to do this, but banks being banks, who knows.

Have any of the mortgage brokers here got any thoughts of the process?

Thanks again
Marty

 

[Bradsdad]

It is possible but you will need to make arrangements with lender A to have title released once settlement has been effected.

It would be worth your while also to ensure once you have a settlement date that Lenders A FULLY understands that the 2nd title isn't being released to Lender B. it's amazing how confused some institutions get over something so simple.



Regards
Steve

 

[kissfan]

It is possible but you will need to make arrangements with lender A to have title released once settlement has been effected.

It would be worth your while also to ensure once you have a settlement date that Lenders A FULLY understands that the 2nd title isn't being released to Lender B.

Hi BD.

Yep, have only faxed back the discharge authourity to lender A yesterday with a tentative settlement date. Think I'll phone them (numerous time ) during the refinance to ensure they are on the same page.

Regards
Marty

 

[GoAnna!]

Hi KF

Sorry I just reread your question and realise I misunderstood it.

I would instruct Bank A in writing as to what you want them to do with the second unencumbered title upon settlement (assuming you have no soliticitor). What are your plans for that title?

 

[kissfan]

What are your plans for that title?

Umm, good question.

Undecided at this stage.

I may, at a later date, get a LOC against it for further investments. Part of my plan has always been to own X amount of IP's outright and live off the rents, with distributions off mgd funds/shares as well. With the IP's that are owned, can then get LOC's against them (as mentioned above) to further reinvest into something that pays a good yield but not quite the time for that.

Still a way to go, but things are taking shape.

Regards
Marty

 

[Spectre]

Marty

I'm comin in a bit late here.

Banks will term what you are trying to do is a partial release of security

As you've noted, you filled in the discharge form, they process the release and then you nominate where you want to collect it from. So the bank gives you a form called a release of mortgage (which is a govt 1 page form).

If you take the ROM to the titles office, then they release the mortgage for under $200 - cant remember what it is right now as I'm a bit 'foggy' shall we say... and my nurofen hsnt kicked in yet.

Ages ago people used not to send them in as they wanted to transfer the stamping on the mortgage but since qld has scrapped that it probably doesnt matter as much.

But the mortgage is not discharged from the bank until you take the release to the titles office. All the bank does is give you the release then you handle it from there. As far as the bank is officially concerned it no longer forms a part of their security but indirectly... might be another case.

After the titles office bit they should be able to provide you with a printout showing there is no mortgagee afterwards on a title statement

hope that helps some bit

 

[Spectre]

Marty
As a further re-read and edit to the above... (sorry i'm kinda rough this am)

Lender A revalues property remaining with them and ascertains if it will support the debt remaining with them.

USUALLY this is at or under an 80% lend against the remaining security

With lender B coming in all you do is hand in the discharge authority and then lender B collects the release at or prior to settlement and your job is done. If the bank ends up wanting to give it to you then you collect the release give it to lender B as they'll need the release to take to titles and then you have a release of mortgage for lender A occur and a new mortgage gets put in its place by lender B. You'll still have fees for the two transactions.

 

[GoAnna!]

Umm, good question.

Undecided at this stage.

I may, at a later date, get a LOC against it for further investments. Part of my plan has always been to own X amount of IP's outright and live off the rents, with distributions off mgd funds/shares as well. With the IP's that are owned, can then get LOC's against them (as mentioned above) to further reinvest into something that pays a good yield but not quite the time for that.

Still a way to go, but things are taking shape.

Regards
Marty

So you want to collect the title and store it where? If I have understood correctly the title will be 100% clear which means that you 100% own it which means it will end up in your hot little hands. If you are having it held with a solicitor why not have them take it upon settlement with bank B?

 

[kissfan]

USUALLY this is at or under an 80% lend against the remaining security

With lender B coming in all you do is hand in the discharge authority and then lender B collects the release at or prior to settlement and your job is done. If the bank ends up wanting to give it to you then you collect the release give it to lender B as they'll need the release to take to titles and then you have a release of mortgage for lender A occur and a new mortgage gets put in its place by lender B. You'll still have fees for the two transactions.

Thanks Luke.

On the Discharge Authourity (already faxed to lender A), the form asks for * "address/es of properties held", which I've filled in.
* "address/es of properties to be discharged", which I've answered with, all of the above and I put in a sidenote stating that lender B is taking possession of property 1 and property 2 is to be released unemcumbered.
* "type of discharge" (i.e, full or partial), to which I ticked full.

As mentioned before, I'll definately get in touch with lender A to inform them of my instructions, and will also be in touch with lender B during the process to ensure they are aware of what is going on.

Regards
Marty

 

[kissfan]

So you want to collect the title and store it where? If I have understood correctly the title will be 100% clear which means that you 100% own it which means it will end up in your hot little hands. If you are having it held with a solicitor why not have them take it upon settlement with bank B?

Hi GoAnna.

The unemcumbered property is in Qld and my understanding is that the actual title deed is not passed on anymore, it is held "electronically". My obvious concern is that my name is showing on the last entry, not the banks name (once settlement is reached).

There may be some receipt which is passed on to me, not sure though.

Regards
Marty

 

[BoatBoy]

Hi Marty,

We just did exactly what you describe not that long ago. I didn't use a solicitor, just dealt with Bank B's Solicitors, who organised all the paperwork - was all pretty straight forward, but I did have to chase them up toward the end (Xmas and New Year fell in the middle - rather unfortunate).

I ended up with a release document that I took to the Titles Office and handed over $115 for memory, and they in turn sent me a Registration Confirmation Statement with my name as the Registered Owner - sweet!

I was going to have it framed and hung on the wall, being the first ever piece of anything I've ever owned, but the actual document is pretty dull and uninspiring, so have filed it away with that property's documents - ready to pull out and show to whoever in the future.

Hope this helps and good luck with it!

 

[kissfan]

I didn't use a solicitor, just dealt with Bank B's Solicitors, who organised all the paperwork - was all pretty straight forward

Hi BB.

This is how I thought it should go, i.e fairly straight forward, but............sometimes the banks don't things the same way as me .

Should be ok though, just another fiddly thing to contend with on the path to successful investing eh.

Lol, re the framing and hanging on the wall.

Regards
Marty

 

[Rangi]

Hi there, new to the forum.

Firstly, if this property has been solely to secure ONE loan, then this is a full release. If this loan has been paid out, then a release request, usually coupled with a fee needs to be given to lender. Then the security can be released. Paperwork is received by customer, but only to the effect that you have received 'notification'. The information is then updated and the lender removes themselves from the title.


Secondly, if this property was used partially to secure a second property, (ie, this was first owner occupied residence used to secure IP) then a substitution/partial release needs to be performed by the lender, coupled by a valuation (of lenders' A security) to ensure that they are happy to release security. Ensure that you always give your lender's plenty of time an a follow up call, as to not miss settlement dates.......


Hope this is of assistance, and may not be true and correct in all instances

 

[kissfan]

Thanks for the info Rangi.

Much appreciated.

Regards
Marty.

P.S Welcome to the forum

 

[kissfan]

Ok, the update.

So the refinance was to (and did) settle this afternoon, admittedly, a bit earlier than I was anticipating but during the process I had spoken to both parties (i.e both banks) and each time I made a point of letting them know that 1 lot of paperwork was to go to new bank and 1 lot of paperwork was to be forwarded to me. These instructions were passed on again yesterday afternoon and again this morning.

So what happens, both lots of paperwork get passed on to new bank .

Not a big deal in the big scheme of things but a tad annoying just the same.

It's a good thing I now expect delays and other mishaps when dealing with banks .

Regards
Marty