Structured gearing

From: Fredo J

I own my own home, have 2 ips and am having trouble borrowing 200K
Total borrowings = 341K total assets
565K about a 60% gearing

The broker is saying it is how the loans are cross collatorilised- he says I should refinance and have one main LOC and use 20% each time I buy a property any comments please


Ambition is the lock motivation the key
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Reply: 1
From: Empy 555

Your brokers concept is to establish a line of credit on your PPOR to 80% or its value.

He will then form probably 4 sub accounts.


a account will be for your owner occupied debt.

b account will be for a 20% deposit on IP number one......he will then introduce another lender to this property to balance out the 80% and offset Mortgage Insurance and "untie" the cross security

this process can be repeated several times subject to equity and income.

this concept of lending is very effective for some people, it avoids joint security, and it will provide benefits to you.

Its a simple process however presented poorly it can be "confusing" at times.

Your initial set up costs can be high to establish the right loans and products....however the benefits will out way the costs over time.

Have your mortgage broker explain it to you thoroughly and maybe have another broker explain to you.

If you are in Sydney I know of a brokers who are very reputable and have done this "kinda" thing for me and several other people I know.

as always do your homework....don't rush this system could be good for you.

The Empy
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Reply: 1.1
From: Bruce Graham

Nice to know you have a list of good
mortgage brokers. My mortgage broker and I
have just parted company.
Can you please post a few mortgage brokers names so we can see who's who?
Bruce G.(Sydney)
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Reply: 1.2
From: Geoff Whitfield

I've just been through this process with my lender. I've been through NAB with their Professionals' Choice package. My own personal lender has been quite good so far- though I haven't yet fallen foul of LVR or DSR. I get charged an annual fee for using the package- but I don't get charged other fees, such as loan setup/application fees or revaluation fees.

It's a good idea to try and use a LOC instead of cross collaterising if you go above the limits. If I'd simply used my house to cross collaterise the purchase to provide 10% deposit for my purchase, I'd have been charged mortgage insurance based on the combined value of the two houses. As it was, by taking the LOC and using that (with the same lender) as the deposit for the purchase, I was only liable for MI on the one property. (And by borrowing 89.9% instead of 90%, I saved another $500 on MI- the same rate is payable on 88% to 88.99%).
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