xcol or not ?

[gander]

Hi everyone

I have been searching trying to find information or articles relating to the pros and cons of xcol. Could someone point me towards articles/information on xcol and the pros / cons?

I have read differing opinions on the subject and am trying to find out what will best suit me.
My PPOR is paid off - have a loc that I can use for IP. Trying to work out if I should get a separate loan for 80% and use loc for 20%... or just use loc for all of it.

I'd also be very interested to hear any opinions you'd care to share.

Thanks
G

 

[Rolf Latham]

Hiya

If you dont need to cross collateralise, then dont. There is usually no borrower benefit in doing so. Lenders do prefer it because they have more control over the assets, but then remember that lenders are meant to get maximum contribution from you.

Common concnsus is to Draw the 20 % (+costs) from the PPOR secured loan and get the 80 % balance from a loan secured only against the new IP.

ta
rolf

 

[joanmc]

I would also suggest using the LOC for deposits and then go elsewhere for the other 80%. We have used xcol in building our portfolio and I don't have a problem with it but you will possibly do better the other way. always crunch your figures.

 

[josko]

Hi gander,

There are loads of threads, even today with information that you require direct from the brokers that are on this forum. Rolf being one of them.

In the end, you will need to make your decision on what you feel comfortable with and what suits your personal situation.

Personally, I would not do it.

Regards Jo

 

[Peter_Tersteeg]

The main advantage of x-col is it makes lenders more happy as they have more control over your portfolio and your assets. In some cases this can get you places where you might not have been able to go to.

Until you get to that point, other than convinience I can't think of a reason to have it. If you don't need it, they why would you take it?

The main disadvantage is that you relinquish a lot of control of your portfolio to the lender. I've got dozens of examples where x-col made life difficult for a borrower when it could have easily been avoided.

 

[Perp]

Cross Securitising and Pulling equity, X-coll? have quite good coverage of the considerations.

 

[geoffw]

Xcoll worked ok for me when I started out because I didn't know any better. It got me into a sticky mess later on though.

 

[gander]

Thanks all for your replies.

I am coming around to the thought that we are best to draw 20% from PPOR LOC and then get a separate loan for the rest.

If this is unanimously the best way to do it, I am a bit confused as to why others outside of this forum (who don't appear to have a conflict of interest... and are not lenders or brokers) tell me that xcol is a good thing.

Any ideas? are there any positives?

G

 

[gander]

Cross Securitising and Pulling equity, X-coll? have quite good coverage of the considerations.

Thanks Ozperp. I will check these out.