Cross-collaterisation - the big word that can come with bigger risks
Cross-collaterisation, whereby you use one property as security for financing of the next property, can result in lower interest rates or increased borrowing capacity but also comes with great risks.
Diversifying financing across multiple lenders is a great way to spread finance risks and avoid cross-collaterisation. (Image source: Shutterstock.com)
When it comes to building a property portfolio, the goal is to only need to save for the first property and build the portfolio from this starting block.
However, when you are financing for your next property, you may wonder whether cross-collaterisation will boost serviceability and allow for a higher loan amount.
For some investors, this may be the right financing strategy but for most investors cross-collaterisation is not a wise move and is…
