Going too fast??

From: Rolf Latham

Hi Anon

Good to see your back - we missed you

Even with non cross collateralised properties most investors would only pay one lot of fees for start up and maintenance.

I have one client who has 18 loans and splits without cross collaterisation, one lot of fees only.

I can see how getting one piece of paper for a statement can be beneficial if you have 10 ips.

I think there is also some confusion here in that you can have 100 loans with the same bank and not be cross collateralised.

Hence having 800 k with one lender in aggregated borrowings is no problem and yes can get good discounts on things.

Cross collateraisation invloves using the equity from one property to provide a security or collateral deposit to another property loan. Commonly this can involve second and third mortgages.

I too like you am amazed that people will spend weeks yet months looking for an IP and will then use also ran loan products, when this can have more inlfuence on their future than buying well.

Who is John Laws, is he related to Jeremy ?


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From: Anonymous

Hi Rolf

We may well agree but have different definitions on what is cross collateralisation.

Firstly I agree that X-Collateralisation using 2nd and 3rd mortgages would be giving alot of control to the bank and the bank could make it hard to realise future valuation gains wanting the 2nd, 3rd etc mortgages cleared up before recognising the gains.

I understood that x-coll was one loan across a number of properties. And that loan is a first mortgage on all the properties. Using an Interest Only LOC, the loan contracts and expands as properties are added or sold.
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From: Rolf Latham

True This is another form of xcoll.

Technically no diff though since you are still single lender reliant when it comes to vals, they all have to value up or no go. When times get tough as they have done for a few on this forum, and you want to get something diff across the line you dont want to be in a possy t0 have to refinance 25 properties - the lenders take it or leave it approach - doesnt happen you say - just ask out there it happens regularly !

Now you see theres a benefit you didnt think about !

If you have 25 properties and they have only gone up by a little, you can actually strip out smaller equity growths than with self supporting securities.

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