Property Investor? Do you know how to structure your new or existing finance so you have control over your assets?
Many property investors believe that their loans are stand-alone and secured by just one of their properties when in fact their loans are secured or cross collateralised with their other properties.
For example; you want to borrow 105% of a property’s purchase price to complete the purchase including costs. Many lenders (or brokers) will offer multiple properties in your portfolio as security for your next purchase. This is called “cross-collateralisation”. As an investor in the majority of situations there is little benefit to you. Just a few of the reasons: the inability to revalue your properties individually to access your equity. Often one property can be valued up and the other down and as they are linked, your net gains may be neutralized as they offset each other. You may also not be able to access your funds when you sell a property. It can also be difficult to change products, lenders and you may have unnecessary fees to pay.
As an investor these considerations are important and need to align with your objectives. We can help you with this. So before you buy, talk to us.
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