Will the Bank X-Collateralise on subdivided block?

[OR1ON]

My wife and I are just about to finalise the subdivision of our IP. I had a query regarding what happens to the IP mortgage when the titles are split:

Scenario:

IP Mortgage: $325,000
IP Value: $350,000~

IP 1 Value after subdivision (original block and house): $250,000~
IP 2 Value (subdivided block with Townhouse built): $300,000~

Will the bank automatically cross-collateralise the new block of land due to the fact the mortgage now exceeds the value of the original block? If so – are there any pitfalls I should be aware of? Our PPOR is with another bank, so X-Collateralising is not the end of the world, but may be restrictive moving forward.

I’m not aware of any other strategies to avoid X-Collateralising in this scenario as we have an 80% LVR on our PPOR.

Any opinions/advice much appreciated!

 

[Bigtone]

My wife and I are just about to finalise the subdivision of our IP. I had a query regarding what happens to the IP mortgage when the titles are split:

Scenario:

IP Mortgage: $325,000
IP Value: $350,000~

IP 1 Value after subdivision (original block and house): $250,000~
IP 2 Value (subdivided block with Townhouse built): $300,000~

Will the bank automatically cross-collateralise the new block of land due to the fact the mortgage now exceeds the value of the original block? If so – are there any pitfalls I should be aware of? Our PPOR is with another bank, so X-Collateralising is not the end of the world, but may be restrictive moving forward.

I’m not aware of any other strategies to avoid X-Collateralising in this scenario as we have an 80% LVR on our PPOR.

Any opinions/advice much appreciated!

yes they will automatically do that.

however if i were u i would then split the loans to borrow 805 against each block and have each split secured by one one title. so loans of $240k on one block and $200k on other. correct it now before too late.

 

[jonmardell]

yes they will have to cause you will not have enough security in one of the properties. you will have to split the loans up and notify the bank to not cross collateralise