multiple properties under a single professional package

[htopg]

I am going to use equity in PPOR to fund 20% of first IP.
PPOR accessible equity = 480k
potential IP loan size = 300k

I talked to a Westpac banker and also customer rep of SCMC (State Custodians Mortgage Company) about their "professional" package

The features I am interested in are offset account and minimise loan setup fees.

Here is what I have found
---Rate---
Westpac: 7.09% - 0.85% = 6.24%
SCMC: 6.02%
* with a loan of 300k, the difference is 300k x (6.24%-6.02%)=$600/year
* SCMC offers further 0.25% loyalty discount after 5 years

---Loan setup fee---
Westpac: $0
SCMC: $0
* same

---Annual fee---
Westpac: $398
SCMC: $345
*not huge difference

---Cross collaterisation---
Westpac: Westpac banker told me that it is possible to have separate "standalone" sub-accounts for my PPOR and IP so that they are NOT cross-collaterised

SCMC: SCMC customer rep told me that if I put multiple properties under one package, they MUST be cross-collaterised
* this implies that if I want to increase your loan with SCMC, all properties must be re-valuated with valuation fee of $275 per property
* SCMC suggests me to take out 2 of their professional packages (1 for my PPOR and 1 for my IP and pay 2 x $345 annual fee of course) to avoid cross-collaterisation

Questions:
1. regarding cross-collaterisation, can anyone with multiple properties under Westpac's professional package comment on whether you can selectively pick which property to re-valuate to top up loans?

2. will "all monies" clause ever be used by Westpac even if properties are under separate sub-account but under the same professional package?

3. SCMC's suggestion regarding taking 2 of their professional package to avoid cross-collateralisation, I see it as pointless as "all monies" clause still enables them to do whatever they like to both properties. Your comments?

Thanks

 

[Peter_Tersteeg]

Questions:
1. regarding cross-collaterisation, can anyone with multiple properties under Westpac's professional package comment on whether you can selectively pick which property to re-valuate to top up loans?

2. will "all monies" clause ever be used by Westpac even if properties are under separate sub-account but under the same professional package?

3. SCMC's suggestion regarding taking 2 of their professional package to avoid cross-collateralisation, I see it as pointless as "all monies" clause still enables them to do whatever they like to both properties. Your comments?

Thanks

1. No trouble at all with Westpac (or most lenders) to avoid cross-collateralisation in their pro-packs. Revaluing only a single property isn't an issue if the loans are set up properly in the first place.

2 & 3. Regardless of the lender, the 'All Monies' clauses will be a problem is you start going into default. If you have multiple properties with a single lender this will always be a risk.

The All Monies clause isn't such as issue with revaluing and general operation of the accounts and properties if they're not cross-collateralised. This type of clause usually only becomes an issue when lenders need to recover money from you. It's unlikely to be a problem if you meet your commitments.

 

[Rolf Latham]

SCMC and WBC

ummmmmmmmmmmmmmmmm


Chery and BMW


no contest.......this isnt a viable or sensible comparison In my view.



What are you trying to achieve and why, whats your end game ?

If its mainly $$$$ then avoid the majors all together and go for U bank et al.

In any case, with that $ amount at wbc one should get close to 100 pt discount if properly chased.


All monies is NOT the same as cross coll.

All monies allows the lender to go for other assets you hold with them.

Cross coll is the same as above + a few other things which may not work so well, I have extracted some from an OLD OLD post and attached below. There are a few others like a partial release where you can get into BIG strife in a falling market.




Westpac will not cross if set up the right way



ta
rolf






Just seven reasons faced by my clients with cross coll have been :

1. Bank holds all your equity. Says no more money, youre at your maximum service level. Release of property may take many weeks to months or at an extreme the lender forces you to take ALL the loans to another lender.

2. Bank holds all your equity and you have fixed loans. Bank Says no more money, youre at your maximum service level. Release of property may cost squillions because you need to break one or more fixed rate loans.

3. Bank holds all your equity. Says no more money, youre at your maximum service level. Loans once were all at 90 % of lvr, now at 75 %. You want to revalue to 90 % and only pay lmi on the new money. Sorry borrower, please go to another lender and pay new mortgage insurance

4. Bank holds all your equity. LMI says no more money, youre at your maximum exposure level. Sorry borrower, please go to another lender and pay new mortgage insurance

5. Bank holds all your equity. Bank says your estimate of valuations are rubbish, we arent going to give you any more money. Sorry borrower, outcomes as per 1 to 4 above.

6. Bank holds all your equity. Mr and Mrs decide to split assets after divorce. 1.3 mill fixed rate loan crossed over several properties. 63 000 break cost to split it all up and sell some off

7. Bank holds all your equity. You run into financial difficulty, BUT you have lots of equity. You try and move one of your properties to a fast settling no doc lender to release funds and get you of trouble. Bank wont release security, they smell a rat, slow the release of the property, and within 60 days you will have a judgement against you and the sheriff at the door.

Now, lets weigh this against the benefits of xcoll .

1. Maybe reduced fees, UNLESS you do a fair few revals in which case your entire portfolio needs to be revalued every time.

2. Xcoll allows you to pool little bits of equity. Most loans will allow top ups of as little as 10 k

3. Sometimes its the only way the lender will do the deal, and in that case xcoll is better than no loan.


Dunno bout you, but in MOST cases xcoll doesnt present a good argument

 

[Terry_w]

At the end of the day all your properties will be at risk (assuming all same owner) no matter if they are crossed or stand alone.

But the day is long and a lot can happen before sun down.

The best example of why not to cross came from an old friend of mine who had 2 properties and then a heart attack. He sold one property but the bank wouldn't let him settle unless he used the proceeds to pay down the other loan. But he needed the measly $20k or so for other problems. The end result was that he went down, bankrupt.

If he had not had his properties crossed then he could have sold one and done with the proceeds what he pleased.

 

[htopg]

What are you trying to achieve and why, whats your end game ?

total of 2 neutrally/slightly negatively geared in within a year
total of 5 neutrally/slightly negatively geared in within 3 year
total of 10 neutrally/slightly negatively geared in within 5 year

That's why I am looking for a professional package to save loan establishment fees.
Westpac is highly recommanded by Nathan Birch and I am wondering if Westpac gives better valuation or just particular Westpac banker?

 

[Rolf Latham]

At the end of the day all your properties will be at risk (assuming all same owner) no matter if they are crossed or stand alone.

But the day is long and a lot can happen before sun down.

The best example of why not to cross came from an old friend of mine who had 2 properties and then a heart attack. He sold one property but the bank wouldn't let him settle unless he used the proceeds to pay down the other loan. But he needed the measly $20k or so for other problems. The end result was that he went down, bankrupt.

If he had not had his properties crossed then he could have sold one and done with the proceeds what he pleased.

and that is the one major HIDDEN little gotcha that gets people in a falling market ALL the time : (

We had one last week where a client went to their banker, they had sold one of 2 props.

They wanted to know how much cash would be left over.

Banker did a desktop val on the retained property and told em, NOTHING let over, you actually owe us money, would u like to take a personal loan.

Lucky for this client, they were set up by us as stand alone, not by that banker who always set things up crossed.

The banker had assumed they were crossed securities .............

Client had a big sigh of relief when we confirmed the stand alone status

ta
rolf

ta
rolf

 

[Rolf Latham]

total of 2 neutrally/slightly negatively geared in within a year
total of 5 neutrally/slightly negatively geared in within 3 year
total of 10 neutrally/slightly negatively geared in within 5 year

That's why I am looking for a professional package to save loan establishment fees.
Westpac is highly recommanded by Nathan Birch and I am wondering if Westpac gives better valuation or just particular Westpac banker?

your current action steps and planning are very out of whack with what you are trying to achieve.............at least I think so.

Sit with a decent broker and get them to put a structured financing and mortgage plan together.

Dont just have this airy fairy goal of 10 ips in 5 years, Document how you will get there, and at least in todays environment, what lenders you would use when and why.

Such a thing will maximise your resources and will show you why your current chase of savings a few $ here and there may cost you more than that in the middle to long term.

I have said it before, yes you can work out what your $ savings will be today, but you have no idea what the actual total cost of those "savings" may be.

I cant help it but I think I have had this discussion a few times before, and maybe even in one of your Threads

ta

rolf

 

[Aaron_C]

Westpac's package is pretty good I must say for the reasons already mentioned.

 

[htopg]

Lucky for this client, they were set up by us as stand alone, not by that banker who always set things up crossed.

The banker had assumed they were crossed securities .............

Client had a big sigh of relief when we confirmed the stand alone status

That's why Westpac professional package is under my consideration as well.
One Westpac banker claims that she can setup standalone loans under one professional package.
Is the standalone-ness of Westpac's professional package similar to the one in your client's real life story?

 

[Rolf Latham]

That's why Westpac professional package is under my consideration as well.
One Westpac banker claims that she can setup standalone loans under one professional package.
Is the standalone-ness of Westpac's professional package similar to the one in your client's real life story?

yes, same lender.

I come back to my original point, its quite possible you shoudnt be looking at WBC now and should indeed be looking at a LOWER serviceability lender (making assumptions) such asn ANZ or Suncorp, and soak up all their serviceability before you move to a middle range serviceability lender like WBC.

ta
rolf


ta
rolf

 

[htopg]

I come back to my original point, its quite possible you shoudnt be looking at WBC now and should indeed be looking at a LOWER serviceability lender (making assumptions) such asn ANZ or Suncorp, and soak up all their serviceability before you move to a middle range serviceability lender like WBC.

By "move", do you mean refinance existing ones+new ones to WBC or just put new ones to WBC?

 

[Aaron_C]

Just put new ones to WBC he means.

 

[Rolf Latham]

By "move", do you mean refinance existing ones+new ones to WBC or just put new ones to WBC?

I'm just using Westpac as an example, none of this is literal advice, or stuff you can action are rely upon, since we know Nick's about your actual situation

the next lender in line for your scenario could be XYZ bank, for NAB etc.

Seriously take a big big breath sit down and work out what you want to do, at the moment you are car shopping in such a way that all you need is a good salesman and you will end up buying a big lemon that is not suited to your needs, simply because you haven't defined your needs, and what sort of car you actually need vs want

thanks

Rolf

 

[Magnum9]

I have just done the same thing you want to do but under ANZ Breakfree. Got a LOC secured against PPOR for 20% deposit plus all borrowing costs. Then got separate IO loan secured only by IP, no cross coll. Because I was already under Breakfree with my PPOR there were zero setup fees, only fee was $36 govt search fee. Plus the new loans inherited the 0.9% discount which I negotiated on my PPOR last year.