Are pro packages cross-collaterised?

[Micasa]

Hi all,
Is it possible to set up a professional package and include more than one security without having them cross collaterised?
To be more exact, I'm think of signing for St George pro package for my first IP (I'm actively looking for it now) and then I'd like to buy my second IP in the next 6 months, so... could I put both under the same package without them being cross-colled?
Thanks!

 

[StuartW]

That's a really good question.

With St George, no. With some other lenders, yes.

Also, there are some products that seem good (e.g. often called Portfolio) but require everything to be crossed which is bad.

The key thing to take away is that people need to look at the fine print and have enough knowledge to pick things up. For example, NAB will often try and cross everything but they don't have to (so you need to know to request them not to).

 

[Rolf Latham]

Stg Advantage does insist on cross coll, but if you ask nicely you can have it not xcolled

ta
rolf

 

[Qlds007]

Shame Dragon isnt here to answer this one but I guess he may only work 9-5.

With the Advantage package it is a condition of the loan.

Taken from the Banks own website.

The Advantage Package is NOT AVAILABLE for:

Where the loan involves more than 1 security and not all properties are linked to all loans

 

[Micasa]

Many thanks for your quick replies! It is very rewarding to get help you quick!

Qlds007:
Correct me if I'm wrong but If I buy a second property that would be a different loan and therefore I would be putting 2 securities in 2 different loans. So I think that is not the case.
Finally, according to their site I could have up to 5 different loans under one package:

5 loans for the one annual fee

So basically if my broker makes sure the second loan is not xcolled I should be able to sleep at night... right?

 

[travelbug]

I have a portfolio loan. 2 properties are cross coll (my PPOR and IP1). IP2 is unencumbered but I used the money from the initial loan to buy it.

My next IP will be with St George but stand alone (no cross coll) or any all moneys clause. I will borrow 80%.

 

[Qlds007]

Micasa

You wont have a choice.

So basically if my broker makes sure the second loan is not xcolled I should be able to sleep at night... right?

 

[Peter_Tersteeg]

The only way to avoid cross-coll under St George's advantage package is to create a second package and pay the fee twice.

You could also just go for their basic product. If you don't require the package features for the second property, the basic home loan stacks up very well.

 

[Dragon]

Good morning.

This is correct. Each property you add to the advantage package is cross collateralised. It is part of the requirements to have the advantage discounts that the loans are cross collateralised.

The reason for this is two fold.

1. It allows you to set limits in your portfolio loans that are not necessarily representative of your apportioned debt to a particular property.

Eg, you may have a property worth $200,000 (IP) and one worth $300,000 (O/O). But you have a loan split of $220,000 apportioned to the IP to account for purchase costs and one for $50,000 against the O/O.

This would not be possible if you did not have them cross collateralised.

2. It provides more security for the bank that if one part of the security has an issue ( eg halved in value , or another nightmare scenario ) , that we can recover the funds. This allows us to price the loans as competitively as possible.

It would be a policy exception to allow the loans not to be cross collateralised.

Like any policy, if there are mitigating strengths to consider otherwise, we can look at this.

You can discuss this with your broker or St George Lender.

 

[buzzlightyear]

Dragon, do you mind confirming what role you have with St George?

 

[Dragon]

Dragon, do you mind confirming what role you have with St George?

No problem at all, I am a lending manager.

My intent is to ensure our policies and opportunities are correctly represented in this forum.

I am not against brokers. I believe that clients choose to either have a relationship direct with a lender, or with a broker.
Considering broker business is approximately half of all customers, it leaves the other half for direct relationships with lenders.

My angle is that we offer a complete financial solution for clients. Home Loans, Credit Cards, Personal Loans, Transaction Accounts, Insurances and Financial Planning etc etc.

 

[Micasa]

But, Dragon, what if I have 2 different loans set up against 2 different properties.

That is...when I buy the second IP:
I will have the cash for the initial deposit and therefore I wouldn't need any extra security or anything related the loan of the first property.

Would in this case also be linked?

Thanks!

 

[michellem]

I believe this is possible - but it does have to be done manually. St George's advice to me just this morning after I read this post, is that it can be done.... I also asked the same question 2 weeks ago and got the same answer...no need to pay a second fee, can be two stand alone loans with different securities.

 

[Dragon]

Yes,

What we do is actually allocate a separate Advantage package number internally and waive the fees.

So for each new property, we add them as a separate loan ( so it is not cross collateralised ). Internally, we allocate a new advantage package and waive the fee.

This is not a standard procedure and must be asked for ( and approved by lender ).

Cheers

 

[Rolf Latham]

Although often the second fee is charged in any case, and then you need to go and chase the refund. Not a major hassle but something to look out for.

Stg is known at our office as the lender that has short arms but very long pockets when it comes to fees.

ta
rolf

 

[eggnog]

hey, thats pretty cool Dragon. You're getting paid to read somersoft.

 

[Dragon]

hey, thats pretty cool Dragon. You're getting paid to read somersoft.

I am paid to represent my employer and provide loans.

This is a good site with mostly savvy investors, I think here is an excellent place to show we are supportive of investors.

So you are right, but I like to think for the right reasons.

 

[Bradsdad]

hey, thats pretty cool Dragon. You're getting paid to read somersoft.

PAID????????????


Hmmmm I'm going to have to have a word to the boss as I'm not getting paid

 

[StuartW]

And I think it’s very valuable to have a lender join the forum as it sometimes brings a different perspective in regards to why lenders do or act in certain ways. Please hang around Dragon. You're most welcome.