Removing Property From Loan

[AMB]

Just wanted to get some opinions on this one.

I have a loan using four properties as x-coll. This fixed rate loan is about $1.5m and still has about two years to go. LVR is approximately 60%. I want to sell one of these properties but keep the loan amount the same. Removing this property would effectively change the LVR to just under 80%. Do you think the bank will agree to this?

Cheers

Andy

 

[Corey Batt]

They will order valuations across all properties to ensure the LVR remains at a maximum of 80%. When it comes time to sell the property, it may be a wise idea to split up your existing properties so you have complete flexibility - selling x-coll'd properties can leave people in a lot of unnecessary pain from poor valuation results, time wasting and delays on settlement.

 

[Redom]

Your lender will do valuations on ALL four securities (or the three remaining) to ensure the overall LVR is below 80%. This can cause serious problems if one of the vals goes short, and you may be up for some LMI if it goes above.

Lender will allow you to sell if LVR is below 80%. Nonetheless, its a good idea to uncross and clean it up while your at it.

Cheers,
Redom

 

[Rolf Latham]

Depends a little on the lender


Get your broker to order upfront Vals so you know why you are in for before you try the partial discharge

Ta

R

 

[Jamie_]

Get a new broker, however it can be hard to find them around here

 

[Peter_Tersteeg]

Easy enough if the valuations stack up, you just need to submit some paperwork for a partial discharge.

It'll be a real problem if the valuations don't work out. This is a very good argument to avoid cross collateralising.

 

[Jamie M]

Get a new broker, however it can be hard to find them around here

lol - they're a rare breed on SS ;-)

Look carefully into this - if that fixed rate loan needs to be broken (it might not have to) it could cost heaps.

Cheers

Jamie

 

[AMB]

Thanks for the replies guys. That certainly gives me an understanding of what I can expect. I've learned a little about the perils of cross collateralising properties on SS since I set up the loan. This is one good reason to avoid it.

Thanks again.

Andy