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Deals with same client and multiple securities
Deals with same client and multiple securities

How to structure deal/s for the same clients with multiple securities

Dalibor Ivkovic avatar
Written by Dalibor Ivkovic
Updated over a week ago

A frequent scenario brokers face is to prepare a deal (or deals) where client has more than one security.

An example of such a deal is a refinance/equity release of one property and purchase of another.

Structuring such a scenario requires good understanding of lender policy and can generally take three directions:

  1. A single deal, where the securities are cross-collaterised.

  2. A single deal, where securities are not cross-collaterised.

  3. Two separate deals, referencing one another in their fact finds

1. A single deal/cross-collaterised

Securities are added in a single deal in Broker Tools/Security details tab. 

Firstly, the existing security is added to Assets (and current associated debt is detailed in to Liabilities with the 'Refinance' checkbox ticked). In Security details tab use 'Add Existing Security' button.

To add new security, click on 'Add New Security' button and enter relevant details. Where Pricefinder or CoreLogic integrations are used, additional details will be auto-populated.

In Funding worksheet tab click on 'Cross-collaterised' checkbox (A) and enter total loan amount:

Full funding position would look like this:

Note that where more than two properties are cross-collaterised, the only option is to cross-collaterise all. I.e. the system cannot cross-collaterise some of the properties and not the others.

Cross-collaterised deals often have multiple product splits, to associate loan accounts with the securities. In this case, splits could be:

  • $800,000 to pay off Owner occupied balance and release equity;

  • $800,000 loan for the new investment purchase.

Splits are added in Review loan products tab. 

When splits are fully added it would look like this:

2. A single deal/not cross-collaterised

The process would be the same as the cross-collaterised example, except the Funding worksheet:

3. Two separate deals

Most lender require each security to be presented in a separate deal (unless cross-collaterised).

Each deal is then presented as a separate application. For example:

  • Deal 1 - refinance and equity release on owner occupied property to release fiunds to purchase an investment;

  • Deal 2 - an investment purchase using funds from Deal 1.

Key to this process is to set deal 1 correctly, then duplicate deal and make assumptions that Deal 1 is approved. I.e. in Assets and Liabilities Deal 1 scenario is presented as a completed deal (higher loan limit and balance for the refinanced property).

In Deal 2, then released funds from Deal 1 are presented in Funding worksheet.

Advisers often need to present the full funding position to their clients for scenarios where properties aren't cross-collaterised. In these cases, the best option is to use funding position in quick tools and show funding position in a single document (and then prepare two separate deals).

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