Hi all,
Up until now, I've been under the assumption that you should not cross colaterise your investment properties, as this would lead to the bank having access to all your properties in the event that you owe the bank more than what they can get for selling the security they hold.
I'm reading a Margret Lomas book at the moment and she states
'It is a false notion that a bank only has the power to take the proceeds of security it directly holds. If you are found to have property elsewhere that may yield funds if sold, then you will be required to sell it, even if it is held by another bank.....
There are other disadvantages with having loans all over the place....If each property you own is held by a different bank, then a single property must increase enough in value to generate a deposit to buy more property without having to re-mortgage the whole package or take some other complicated action. If however, all securities are held with just one bank , then each property only needs to increase a small amount in value to make the total values enough to buy more though one simple loan increase.'
She is a fan of having many sub-accounts on a Line of Credit.
Intersted in the views of investors on here. Is this true? Why do people always stress that you shouldn't cross-colaterise?
Thanks
Sean
Up until now, I've been under the assumption that you should not cross colaterise your investment properties, as this would lead to the bank having access to all your properties in the event that you owe the bank more than what they can get for selling the security they hold.
I'm reading a Margret Lomas book at the moment and she states
'It is a false notion that a bank only has the power to take the proceeds of security it directly holds. If you are found to have property elsewhere that may yield funds if sold, then you will be required to sell it, even if it is held by another bank.....
There are other disadvantages with having loans all over the place....If each property you own is held by a different bank, then a single property must increase enough in value to generate a deposit to buy more property without having to re-mortgage the whole package or take some other complicated action. If however, all securities are held with just one bank , then each property only needs to increase a small amount in value to make the total values enough to buy more though one simple loan increase.'
She is a fan of having many sub-accounts on a Line of Credit.
Intersted in the views of investors on here. Is this true? Why do people always stress that you shouldn't cross-colaterise?
Thanks
Sean