LOC还是X-coll

小茉莉

刚刚看到一篇很好的讨论
跟大家分享一下

LOC大家都知道了
解释一下X-coll（Cross collateralizing）
Cross collateralizing is when you offer more than one property as collateral for a mortgage. This is usually done to avoid paying LMI. The banks love it but most investors don't as it's messier and can be more expensive if you want to sell one of the properties.

Possible situations .

Situation one:
You have a property with heaps of equity but you do not have any cash for a deposit for the next property purchase.
Solution one.:
             Borrow money from house one as line of credit and avoid cross colaterisation.
Pros - You now have money for deposit. on second house. The First house doesn't become repossessed if you can't pay loan on
             house two.
Cons. You have borrowed the deposit so you have to pay interest on the first line of credit loan as well as the new investment
            loan. So you are probably negatively geared anyway.
Solution Two.
            Use property one as security as well as property two.

Pros- Avoid Loan Mortgage Insurance. If you get behind in repayments you have breathing space due to lower Loan value ratio.
           May make it easier to borrow from bank.
Cons. Will probably be negative geared. If you default you could lose both houses.

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Situation two:
You have heaps of cash lying about for a deposit for the next property purchase.
Solution one.:
             Use cash as a deposit for investment property and lower LVR thus making property positively geared..
Pros - You earn an passive income.Property doesn't cost you money to hold.
Cons. You have to pay income tax on positive property income . You are not using maximum gearing.
Solution Two.
            Use cash to pay down property one which is probably a main residence and interest payments are not tax deductible.
            Borrow using both this property and investment property as security for loan two.

Pros- You main residence or PPOR has less non tax deductible interest payments. Avoid Loan Mortgage Insurance. If you get behind in repayments you have breathing space due to lower Loan value ratio. May make it easier to borrow from bank. Maximum leverage.      
Cons. Will probably be negative geared and can claim a tax deduction to help pay off loan. If you default you could lose both houses.   


Comments are of a general nature and may not be relevant to your individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

小茉莉

If you are in situation 2 ( lots of cash for a deposit ) and have a mortgage on your PPOR ( non deductible interest payments ) then the best solution is to use the cash to reduce your PPOR mortgage and then go to situation 1 solution 1. ( establish line of credit against PPOR and use this as deposit and avoid cross collateralization ).

Though your total interest bill remains about the same you now have less non tax deductible interest and more tax deductible interest.

Devil_Star

Personally I don't like cross at all. In finance, I always want to feel that I'm in control, rather than under control. And Cross makes me feel the latter.

小茉莉

同意版主观点

顶