Cross-coll and subdivision

[devo76]

Hi all.
Just having a think on this rainy day.
My plan has always been to build then subdivide my town property without crossing the security on completion as the new property would have a small loan and the existing is at 90%LVR and I have also given the existing a significant Reno that I hoped would cancel out any loss from the land reduction. Softening prices may cause a hiccup here.

Has anyone out there had issues after subdivision in regards to separating the properties as in security/cross coll ?

Cheers

 

[Rolf Latham]

Hi

Usually, with most lenders not a big hassle if the vals are ok AND the rest if yiur numbers and shoe size are ok.

It does depend on the lender though, sub with many lenders is an easy process, with some its a whole new finance app

ta
rolf

 

[devo76]

The lender so far has been great. They know my end goal and they are on board.
It had me thinking about the what if things.
A 20% drop in values will still see me with a profit but they may not separate security(I imagine a possibility).

Crystal ball stuff so soldier on I go. Complete the project. Revalue and then I will see what I have.

 

[Rolf Latham]

Good !

Always good to have your major stake holder on board !!


AS long as you have 20 % equity worst case it should not be too hard

ta

rolf

 

[RumpledElf]

When we subdivided, we paid for everything in cash and had trouble convincing the bank to sign the permission slip (because they held the mortgage on the property to be subdivided) to let us subdivide in the first place - apparently noone pays for subdivisions cash, you're supposed to get loans for them.

Then they left the new block of land in the system, crossed, with value $0.

Had issues uncrossing them later as they decided to do a (very low) valuation that to the cent was enough to cover us crossed, but not uncrossed, and refused to revalue.

Turns out our logic for uncrossing the loans was sound - we wanted it to be easier to change banks if they refused to give us a construction loan for some reason. Which is exactly what happened, and we changed banks with no hassle at all. In a few weeks we'll have no loans with this bank at all and will probably never go back so they sure know how to lose customers.