13 Jun 2016

Why not cross securitise?

What happens is, the bank takes both houses as security and wraps the two mortgages together?

Let’s say we’ve got $830,000 worth of asset and we’ve got $430,000 worth of loans adding the second one in to the total. So we’ve still got $400,000 probably that we can go off and use as security for more lending, not to borrow, but to have as security. You now have security of $830,000 and a loan of around $430,000. So you’re at just about 50% LVR and you’ve got two properties tied up. On the second loan it would list the investment property and the house both as security properties.

Let’s say we want to go and buy another one. We go back to our same bank manager because he was so good to you last time and we want to buy one for $200,000, what’s he going to say?

As long as it’s serviceable the bank manager will say, yes. So you’ve got the income to service it but the bank manager has incorporated this house into your first 2 properties as well. You now have 3 properties listed as security to the bank.

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