Uncrossing Securities

Uncrossing your securities. Hey, it's Aaron from Diagnostics and Finance. Well, this confusing topic comes up a little bit, uncrossing your securities. What we find is I have clients come to me, usually between the ages of 45 and 60, and they find that there's something happened to their investment property portfolio. This turns into a little bit of a puzzle for me, understanding what the net effect of your owner occupied mortgage has had to be able to buy the investment properties. So typically we would normally go down the line of putting a separate split on our owner occupied mortgage to use that to do the deposits and the stamp duty and costs like that. But there's this other funky thing that we can do in the market called cross securitization, where we take your owner occupied mortgage home and the investment property home and we add the values together and we lend some money. That means that you don't have to put a deposit down and you can technically borrow 100% in one single split loan. The problem with that is that you can still do the net effect of not having them crossed. So you have your owner occupied mortgage, then another split, another split, another split for different properties, and then you have a 80% loan on, for example, on investment 1, 2, 3, 4, 5. So why would you have them crossed and why would you have them no crossed? Well, I don't really see a reason to have them crossed, except if maybe I'm going to put people off and say maybe there's a lazy banker or a lazy broker just crossed them all together and it just makes no sense. But when you're in that age group between 45 and 60, you want to be able to control your assets. And the reason, I mean control your assets is that when you come to sell your owner occupied mortgage and downgrade, if you've got 50, 50 to $60,000 left on your own or occupied home loan split and then you go to sell it, they're going to value all your other properties. And then you might find out that you didn't really have $50,000 owed on that security. You actually had 300, 400, maybe even $500,000, because that money then has to go back to rebalancing what we call the loan to value ratio on these other investment properties. So crossing your securities may be easy and simple at the time of purchase, but potentially doesn't help you control your assets down the track. What if you knew that you had three or four hundred thousand dollars on your home loan before you wanted to downsize? Would that be important information? What if you knew that the market on your investment property, when it drops, the loan becomes higher than the property that it's not linked to a home that has a uplift in the market, but they balance everything out on a seesaw. So we want these properties as investment properties to be separate and whatever it needs to do, because if you have a home loan that's higher to the value, you can actually hold that one longer whilst we look at the other properties and your owner occupied properties and see how we can manage your overall portfolio so that you can still hold this one for a bit longer and see what happens in the market. We can downgrade here without having an effect on these other properties and these properties. Depending on what we need to do, we might even have a way of getting the interest rate down related to owner occupied versus investment interest rates. And there's some tricky ways and some ways that we can put through there to help you out. So let's not cross the securities, but if you are crossed, it's easy to sort it out. We just put it out on the table and we sort it out. We uncross them. You'll know exactly what your owner occupied has done to be able to buy these investment properties. Hey, it's Aaron from Diagnostics and Finance. Hope this little video helps you and we'll be in touch soon.