Originally posted by h8dk97
1. Say I used my house as a security for LOC and only used LOC for deposit for my next property, for example the new property will cost me $200,000 + $15,000 other expenses (stamp duty, legal etc). So, I take $35,000 from LOC to pay the deposit and other expenses. Where do I get $180,000? do I get it from the same bank or would I have to go to another financial institution? If it is the same bank, wouldn't they still want to use my house as a security?
You can go the same bank for the extra 180k, or a different. Generally, banks are nicer if they are trying for first time business, not repeat business.
If you do use the same bank, they can try to grab your PPOR as security as well, but if you specific only the one IP as security, you should be ok. BUT, CHECK THE CONTRACT... The banks have been known to slip in an extra security or two.
2. Does it really matter if house was used as a security for LOC, if I cannot repay for some reason wouldn’t bank take the whole house?
not sure what you're asking here. If you default on the loan, the bank will take the security, sell it, take back the loan amount and give you the rest.
Issues with x-coll are more to do with expanding, refinancing and so on. That's when x-coll gets tricky. OTOH, if you have lots of little places, and can only pull 5k from each, x-coll is a good way to bunch them together and get more. It all depends on the strategy.
3. If I used my house as a security for LOC and then sold the house, does it mean that bank does not have security any more?
Yes, you would have to replace the security under the LOC.
Jas