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!
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!