Cross Securing allows property owners to tap into the accumulated value of their property to finance new ventures, diversify portfolios, or fund other property investments.
Understanding Cross-Securing:
Essentially, it means leveraging the existing equity in one property to facilitate the purchase or investment in additional properties.
This strategy provides a powerful financial tool for investors looking to expand their property portfolios without the need for significant additional capital.
How Cross-Securing Works:
- Assessing Equity: To begin, we need to assess the current equity in existing property. Equity is the difference between the property's market value and the outstanding mortgage amount. The higher the equity, the greater the potential funds available for investment.
- Engaging Lenders: Once the available equity is determined, we can approach the right lender on your behalf to explore cross-securing options. Depending on the purpose of the funding and your personal circumstances, we can look at a either a separate loan against the equity in the existing property (cashout) or using it as security for the new investment loan (cross securing)
- Risk and Considerations: Cross-securing properties involves an element of risk. If the new investment doesn't perform as expected, it may impact both properties. You should carefully consider the potential risks and have a solid strategy in place to mitigate risks along with financial advice from a trusted and qualified advisor.
What are some of the benefits of Cross-Securing for Investment:
- Leveraging Existing Assets: Cross-securing allows you to leverage the value of you existing properties, unlocking funds that can be used for strategic investments.
- Portfolio Diversification: You can use the released equity to diversify their property portfolios. This might involve acquiring properties in different locations or targeting different types of assets, spreading risk across the portfolio.
- Enhanced Buying Power: With the equity released through cross-securing, you could potentially increase your buying power. This can be crucial in competitive markets or when attractive investment opportunities arise.
- Potential Tax Benefits: The interest paid on loans obtained through cross-securing may be tax-deductible, providing potential tax advantages for investors. However, it's crucial to consult with a tax professional to understand the specific implications for individual circumstances.
If reading this has made you think of your own personal situation and you would like a confidential chat about your finances please reach out:
** Please note - The above does not take into account your specific personal circumstances nor does it constitute advice in any way. You should consult a tax advisor and financial planner for any specific advice.
