Originally posted by ivanp
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One Bank Trap, Any Live Examples??
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Originally posted by genius View PostOriginally Posted by Damap
The "risk minimisation" strategy is to have 1 bank per entity no cross securitisation. So LTC 1 = Westpac 2 mil LTC 2 = ANZ 2 mil
Westpacs priority amount can be 5 mil they have no access to anything in LTC 2 unless you have cross securitised them. If you are using your PPOR for deposits there is no need to give them any other security as they are only 80% max exposed.
I believe Damap here is right - having 1 LTC for each bank is a much safer strategy. Using different banks but 1 LTC is not ok (imho) because even though there is no cross security, your LTC has signed a guarantee with every bank and worst case scenario, you'll have to pay any proceeds from one property to your other bank.
Whereas with two LTCs, Bank 1 has zero control over it. I'm allowed to buy a property where my Dad is a director for an LTC and my aunt owns 100% shares in it (just an example)
Also personally, multiple LTCs give me more flexibility (I can allocate shareholdings more efficiently) rather than having 11 properties in one LTC where I'm the 99% shareholder :P
If you are in trouble with one bank, I'm sure that one bank will be enough to bring you down anyways.
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If you are in trouble with one bank, I'm sure that one bank will be enough to bring you down anyways.
Of course if you unravel completely as we did then it makes little difference but let's say you got sued over one of your properties and lost and someone came after you for a mil. They can only go the entity involved not your other stuff.
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Originally posted by Damap View PostNo that is quite wrong that's why you do it. The bank can only go the entity it has hooks into.
Of course if you unravel completely as we did then it makes little difference but let's say you got sued over one of your properties and lost and someone came after you for a mil. They can only go the entity involved not your other stuff.
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Originally posted by Gary Lin View PostWell that's a lot of accounting fees. I'm sure GRA will love you for it!!!
If you are in trouble with one bank, I'm sure that one bank will be enough to bring you down anyways.
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Originally posted by Gary Lin View PostA single bank can take you to court and force bankruptcy isn't that correct?
IF they are under LTCs in a complicated structure where they've got zero security, then NO
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Originally posted by Damap View PostNo you just don't sign PG's. The bank has adequate security in the property it doesn't need PG's.My blog. From personal experience.
http://statehousinginnz.wordpress.com/
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I have recently been involved in 4 lots of new lending for other people. Banks were BNZ and ANZ. If you are at 80%, (or 70% now in Auckland), no PG required. They had it in their initial paperwork but I told them to query it and bank said not required.
They had ridiculously high priority amounts already.
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Originally posted by Damap View PostI have recently been involved in 4 lots of new lending for other people. Banks were BNZ and ANZ. If you are at 80%, (or 70% now in Auckland), no PG required. They had it in their initial paperwork but I told them to query it and bank said not required.
They had ridiculously high priority amounts already.
I want to buy a new property with a different bank (cash-flow positive, existing tenancy) and don't want them to look too closely at my existing income/PG commitments. Do you think this is possible?
I am looking at buying it through a Trust.My blog. From personal experience.
http://statehousinginnz.wordpress.com/
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Definitely possible. We have done it through a trust with a corporate trustee. I haven't heard anybody on PT say they have had to PG loans recently. When they have 20% equity in the property there is no reason for them to need one. Ring a few up and ask!
(May be harder in no growth locations)
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