Header Ad Module

Collapse

Announcement

Collapse
No announcement yet.

Mortgage Question

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Mortgage Question

    Current situation - I have a two seperate mortgages; one is on my home which I own jointly with my girlfriend, the other is on a rental property that I own in partnership with my Dad (mortgage is in my name only). These mortgages are both with different banks at the moment, however I'm thinking about moving my home mortgage to the same bank I have my partnership mortgage with, as I can access a much better interest rate. My question is: do I expose our home to more potential risk by moving it to the same bank as I hold my rental with? For example, let's say things went pear-shaped for some reason with my rental and I defaulted on the mortgage. Would the bank have any additional leverage over my personal home than if the mortgage was held with a different bank (neither are used as collateral for the other)?

  • #2
    Originally posted by thefox001 View Post
    Current situation - I have a two seperate mortgages; one is on my home which I own jointly with my girlfriend, the other is on a rental property that I own in partnership with my Dad (mortgage is in my name only). These mortgages are both with different banks at the moment, however I'm thinking about moving my home mortgage to the same bank I have my partnership mortgage with, as I can access a much better interest rate. My question is: do I expose our home to more potential risk by moving it to the same bank as I hold my rental with? For example, let's say things went pear-shaped for some reason with my rental and I defaulted on the mortgage. Would the bank have any additional leverage over my personal home than if the mortgage was held with a different bank (neither are used as collateral for the other)?
    The thing to consider her is not really if things go pear shaped...cause if that happens (I'm assuming you personally guaranteed both loans) they can go after stuff and where ever your mortgage is. Although if at the same bank it is easier.

    The advantage of different banks is that if one house gains capital gains at a higher percentage than the other...you can leverage that equity solely on that house. If owned by the same bank normally your capital gains are averaged over both properties.

    Knowing the equity portion for both houses and your future aspirations is really needed to be able to make a decision on which is best.
    Generally if you have low percentage of equity in property..keeping it at different banks is best.

    Comment


    • #3
      I wouldn't.

      Comment


      • #4
        Be aware that even though you think that banks are different, it ain't necessarily so.

        ANZ/National, ASB/Bank Direct are the same banks. If you have a deposit in one Bank but default on the mortgage in the other, they can (and have!!) grabbed the deposit to cover it.

        There's probably a lot more bank linkages out there.

        Be careful who you bank with. As examples - KiwiBank for deposit, or PSIS, or Credit Union (I'm not talking about deposit rates, I'm talking as assumed safety) and borrowing from ASB or ANZ or National or BNZ.
        Patience is a virtue.

        Comment


        • #5
          Originally posted by thefox001 View Post
          Current situation - I have a two seperate mortgages; one is on my home which I own jointly with my girlfriend, the other is on a rental property that I own in partnership with my Dad (mortgage is in my name only). These mortgages are both with different banks at the moment, however I'm thinking about moving my home mortgage to the same bank I have my partnership mortgage with, as I can access a much better interest rate. My question is: do I expose our home to more potential risk by moving it to the same bank as I hold my rental with? For example, let's say things went pear-shaped for some reason with my rental and I defaulted on the mortgage. Would the bank have any additional leverage over my personal home than if the mortgage was held with a different bank (neither are used as collateral for the other)?
          Short answer, yes.

          You'd want to get your partnership with your Dad recognised by the bank as a separate entity, and an acknowledgement that debt owed by the partnership isn't secured by the mortgage over the family home .

          As the existing mortgage is in your name only, I suspect your Dad isn't on the title. He ought to be, if you want to advance the argument that the two borrowings should be separate.

          Even then you'd have to be careful with the documentation to make sure the partners of the partnership weren't jointly and severally liable personally for all debt, in such a way that a default under the partnership mortgage would trigger a default under the family home mortgage.

          You might wish to take the opportunity to restructure your rental property into a clearly separate entity such as an LTC.

          I dunno though...surely there is another bank around able to give competitive rates?

          Comment


          • #6
            Or just hit your current bank up to match your other banks offering - they seem pretty willing to hang onto customers at the moment.

            Comment


            • #7
              Originally posted by essence View Post
              Be aware that even though you think that banks are different, it ain't necessarily so.

              ANZ/National, ASB/Bank Direct are the same banks. If you have a deposit in one Bank but default on the mortgage in the other, they can (and have!!) grabbed the deposit to cover it.

              There's probably a lot more bank linkages out there.

              Be careful who you bank with. As examples - KiwiBank for deposit, or PSIS, or Credit Union (I'm not talking about deposit rates, I'm talking as assumed safety) and borrowing from ASB or ANZ or National or BNZ.
              I was in the situation of commercial borrowings with ASB and residential borrowings with Bank Direct. They were happy to confirm that the two were separate, and indeed I obtained a letter to that effect.

              However I knew enough to ask. People that never raise the question might well find themselves caught.

              Comment

              Working...
              X