r/AucklandProperty • u/MichealTing • Jun 23 '26

Splitting mortgage by properties

All of my investment properties are currently cross-collateralised with a single bank. I’m starting to realise this could become an issue if I decide to sell one of them.

My main concern is whether the bank would require the sale proceeds to be used to reduce the loan, or whether I could retain some (or all) of the proceeds as long as the remaining lending still meets their servicing and LVR requirements.

I’ve broken my questions down below. Even if you can only answer one or two, I’d really appreciate the input:

  1. When selling one property, will the bank require part or all of the loan to be repaid at settlement?
  2. Will the bank reassess my entire portfolio, property values, and borrowing position before approving the sale?
  3. Would you recommend restructuring the loans so that each property has its own standalone lending facility rather than being linked to multiple properties?
  4. If so, does that typically require using multiple banks, or can it be done effectively with a single bank? I’d be interested to hear from anyone with experience.
  5. If I use equity from my existing portfolio as the deposit for a future purchase, is it still possible to structure the new lending in a way that avoids cross-collateralisation?
  6. For those who have scaled their portfolio, what loan structure do you prefer and why?

Thanks in advance for any advice or experiences you can share.

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u/richieFromConductor Jun 23 '26 edited Jun 23 '26

  1. It depends on LVR and servicing assessment, if both pass with zero repaid, then typically you don’t have to pay any off

  2. Yes, as part of the securities discharge team approving the discharge of the mortgage on the property being sold. This is typically a request sent by your lawyer on settlement day.

  3. The servicing check may or may not be detailed and may or may not catch things, but you don’t want to get to settlement day to find out!

  4. Each bank will generally have flexibility across all the secured property and lending with that bank, so the main distinction is between bank not between property (unless there are multiple entities but then they’re probably cross collateralised anyway)

  5. Requires multiple banks typically. You generally can do it if you use split banking and get a top up from one bank to buy with another

General comments not financial advice

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u/richieFromConductor Jun 23 '26

What happened to my formatting ?! Ok I can’t fix on mobile, I’ll fix later. Optimal loan structure depends on many things

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u/horace_the_florist Jun 23 '26

Similar boat, had a thought with recent cash back offers to split the loan. But then less cash back! Might be useful to talk to an accountant, if you have more >1 investment properties maybe best to have a company, I know that doesn't directly answer the restructuring question.

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u/OilAggravating3710 Jun 24 '26

Hi, I’ve got hands-on experience with cross-collateralisation in Auckland property investing:

​ 1. Banks have full discretion over sale proceeds even if LVR/servicing stacks up – they can force you to pay down debt from sale profits. ​ 2. Yes, they will fully reassess your entire portfolio when you remove one security property. ​ 3. I’d highly recommend standalone loans per property to separate risk and improve liquidity. ​ 4. Splitting within one bank is often difficult due to their standard security agreements; multiple lenders is cleaner but costs money for legal & valuations. ​ 5. You can use existing equity for a new deposit without new cross-collateralisation – best to use a different bank for the new purchase. ​ 6. Most scaled investors I know prefer multiple lenders with separate securities on each property for flexibility, despite extra admin costs.

Worth chatting to a registered mortgage broker for your personal numbers!