Learn how to cross-securitize two properties inside a single funding position with two loan splits. In one split, you document the client's equity and loan position for their current property. In the second split, you propose a loan to cover the purchase cost of a second property.
A different article shows you how to help a client leverage equity to refinance a property and purchase another with two non-securitized funding positions.
Contents
Prerequisites
Know how to create a funding position.
Video walkthrough
Learn how to create a funding position for multiple securities (crossed) for purchase and refinance.
Creating a funding position
In this use case, the client owns a residential property valued at $1.0 million, which has a $600,000 loan. The client wants to leverage that equity to finance the purchase of a second property for $600,000.
Open a deal and create a funding position. Fill in the Lender and Package section. In this example, we set the Loan Purpose to Mix of Owner Occupier and Investment.
Calculating funds required
Expand the Funding Position Detail folder. Fill in the required fields in the left column to calculate the funds required for this cross-securitized deal.
Enter the total value of all properties in the deal. In this case, the figure is $1.6 m ($1.0 m for the current property plus $600k for the property to purchase).
Enter the purchase price of the property the client wants to buy.
Enter the value of current loans (e.g. a $600k loan on the current property).
Click the Stamp Duty icon to calculate taxes and fees on the purchase of an investment property.
Add a figure for solicitors and incidentals. Optionally, click the Show Details link and enter a detailed list of expenses.
Optionally, leave the LMI blank (assume it's less than 80% for this deal).
Add a figure for bank fees (e.g. $200).
The field at the bottom of the section shows Total Funds Required, about $1.22 m for this use case.
Go to the right side of the column and enter the base loan amount. In this case, we round up the loan amount to $1.22 m. The green bar at the bottom shows a small surplus.
Calculating the loan splits
Scroll down to the Loan Splits heading and click the Calculate Loan Splits button.
In this use case, we assume two loan splits. One for the existing loan on the current property ($600k) and a new split to pay for the second property.
The popup shows the post cap loan value (e.g. $1.22 m).
Go to the first field and enter the value of the current loan (e.g. $600k).
Click the Add Split button. BrokerEngine auto-fills the new field with the required loan amount for the second split (e.g. $620k). Click Apply and Yes in the confirmation popup. BrokerEngine creates two loan splits.
Add a loan product for each loan split. If applicable, set the Loan Purpose to Investment for the second loan. Optionally, enable the Rate Lock feature if this is a variable rate. Click Save. The funding position is now complete.
Client presentation
Export the file as a PDF (or doc) and show the client the cost of the second property purchase.
Optionally, the broker can create a client-facing proposal.
Go to the top of the funding position.
Click the three-dot icon.
Select a file option.
BrokerEngine generates a report that neatly displays repayment details for the loan splits and the funding position.
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