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Selling a cross collateralised property

Discussion in 'Real Estate' started by chrisjacko, 29th Aug, 2018.

  1. chrisjacko

    chrisjacko New Member

    Joined:
    29th Aug, 2018
    Posts:
    1
    Location:
    Melbourne
    Hello,
    I own 2 properties- both investments;
    1: Loan: 210k. Value: 450k
    2: Loan 500k. Value: 80k. (yep, i brought in the mines and it has screwed me)

    The two properties are cross collaterised. If I sell both, I am in debt close to 200k.
    Question: If I sell property 1, will the bank keep ALL (100%) of the sale to put towards property 2???
    Is there any way to do this and be left with some sort of money to use for myself??????? I think Bankruptcy may be my only option, but I'd love to possibly get my hands on something even small before declaring. OR if anyone has another solution for me shoot away by all means, I'm desperate.

    Thanks very much, Chris
     
  2. twisted strategies

    twisted strategies Well-Known Member

    Joined:
    3rd Nov, 2013
    Posts:
    900
    Location:
    QLD
    if you take the Royal Commission as a guide , yes the banks will grab it all and leave you with a nasty bill ( possibly added to by rushed sales . )

    i suppose there is no way of earning your way out of this ( say temporarily reduced rents )
     
  3. Hodor

    Hodor Well-Known Member

    Joined:
    17th Sep, 2016
    Posts:
    258
    Location:
    hodor
    That's what crossing exposes you to essentially. No way to uncross now either. Even if you could sell ip1 get the cash and then go bankrupt the money won't be safe from my understanding so even with the loans with different lenders you would be left with almost nothing. Don't blame the banks for this as for once they haven't done anything from what I've read.

    Do you ever see a recovery in value? Are you sinking coin paying the mortgage?

    Your options sound like they are to hold on or bankruptcy. Then again I'm just a mug. One thought I just had is don't bankrupts get to keep their PPOR, not sure what would happen if you moved into IP1.

    You need to seek professional legal advice IMO. Knowing the facts not internet hearsay is what you want.

    Good luck, sorry to hear it's all gone wrong for you.
     
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  4. Terryw

    Terryw Well-Known Member

    Joined:
    9th Jun, 2006
    Posts:
    861
    Location:
    Sydney
    To be able to settle the sale you will need to get the mortgage discharged. To discharge a mortgage the bank will want the remaining loan reduced to 80% of any remaining security value.

    So you had better contact the bank and see if the will allow the sale to go thru. Definitely will want all proceeds be used to pay remaining debt down at the very least.
     
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  5. kum yin lau

    kum yin lau Well-Known Member

    Joined:
    21st Aug, 2017
    Posts:
    53
    Location:
    adelaide
    Hi, sorry that you face such tough choices. It might help to clarify your choices.

    1) Sell everything. End result: 200K debt
    2) Sell IP 1, owe 270K on IP2 which has a value of 80K currently.
    3) Sell IP2, owe 630K on IP1 which is probably not an option because the bank won't allow it.
    4) Don't sell anything. The bank wants you to pay the 210 and 500K loans.

    So much depends on your own situation. A single person in your situation will have more freedom to move. Hodor is right - if you're able to make the non performing IP your home, then your problems are not so insurmountable.

    Is there a chance that you can work overseas?

    Let us know how you get on.

    KY