Help for servicability computation

[imonmyway]

It depends how the loans have been structured.

Your house has an LVR of 280/450 = 62.2%
Your IP has an LVR of 305/287 = 106.3%

Given this, they've cross collateralised the two properties (used both properties as security for both loans), so your calculation is the correct one.

For an LVR of 80.33% most major lenders would be able to waive the LVR requirement, although technically they are entitled to charge it. I've negotiated this myself with CBA recently and Westpac have an 85%, no LVR policy.

Keep in mind with cross collateralised loans, if you wanted to increase the borrowing against either property, you would pay mortgage insurance on the combined value of the loans, not just the loan you're increasing. This is one of may reasons why this structure benifits the bank, not yourself.

Hi thanks for the info very helpful

until yesterday in my ignorance i hadnt heard of cross collaterised loans. I expected when i bought this place that it would be secured against my present home I didnt think there was any other way to borrow more then 100% of the cost.

I have done some reading on this since yesterday and even though it sounds more risky im happy with the level of risk i have exposed myself to but its something id say i can fix next time i re-finance the loan.

However could the bank use this as a way to complicate me switching lenders ?

If i buy more properties how do i borrow more then 100% of the cost to cover the purchase?