Extra bank fees can include $200 for the valuation of each extra property, higher mortgage insurance premiums if applicable, extra settlement fees.
The extra costs for a simple top-up can range from $200 but can be well above this if you have a few properties. And, there’s more…
Yes, the list goes on, other negatives of cross securitization include:
- The lack of flexibility with regards to accessing extra funds,
- Loss of control of funds when selling a property cross-secured with another property that has dropped in value,
- Being tied to one lender if one or more properties have dropped in value,
- Reduction in negotiating power when a lender has control over multiple properties
Are there any positives? While the positives are generally in the favour of the bank, three reasons why cross securitization may be considered are:
- To reduce fees if a property is only to be held for a short time
- To obtain a higher discount by having larger loans
- To make a deal possible when an unusual property is being purchased
In these cases it is important to carefully way the positives and the negatives to ensure an informed decision is made.
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