Separating Two Home Loans- Refinancing?

Hey guys
If i have two properties that are tied together- i.e one is dependent on the other for security- if i want to ask the bank to separate both -as i can now afford say twenty percent deposit on each- does the bank have to do another credit check etc?

-planning to do this so I can transfer each loan separately to two different banks to gain a cashback from each bank- lol- so i dont want to have three credit checks happen within a week -looks bad prob?


  • The bank would be checking a lot of things. You're effectively changing the security, refinancing, such that they'd want to be sure that you can repay the mortgage based on your new circumstances.

  • Personally I wouldn't go to the trouble of decoupling at your current bank, as there will usually be fees involved in setting up / splitting your loan. They may charge you for valuations on both properties, depending on the bank, to confirm equity in each before splitting. Just arrange for your two stand-alone refinances to settle simultaneously. Then you'll only have the two hits to your veda, if that's what you're worried about.

    • sorry not sure what you mean about two stand alone refinances- like do you men asking one broker to just refinance each loan with two different banks - can they do that given both are currently under one security-that is the owner occupied is security for the investment?

      • I was referring to your comment "planning to do this so I can transfer each loan separately to two different banks". So instead of asking your current bank to split the loan into two separate loans and then refinance to two different banks, just do the proposed refinances.

        Provided you have sufficient equity, this will be do-able.

  • You can achieve this when you refinance too. If you do it now, current bank will charge you valuation fees to ensure that the standalone security is sufficient. Might do a credit check too. Although, depending on your lending manager, if they have visibility on your income and expenses, they may not need to reassess. Banks want to retain your business too. I don’t think that they will reassess and risk your loans not meeting the new APRA criterion. There will also be mortgage discharge and re-registration fees for two properties. This will all add up quickly. There isn’t any real benefit if you continue with the current lender.
    Instead, refinance and let the new lender work this out. They may not charge you any fees for valuation, plus more give you cashback which can be used to pay the mortgage discharge and re-registration fees.

    • true but i was thinking of refinancing each loan with two different banks to double the cashback hha…but im not sure can do this if they're tied together at the cuurrent bank?

      • You can still do that, just do the loan settlements at the same time. So, the current lender will bring the mortgage documents to settlement, they get paid out the outstanding amounts, and the incoming lenders get one title each to register their mortgage interest on. When you apply for refinance, just let them know that you have two properties, and loan is for one property each with security on the property they are lending for. If you are going via a broker they will know how to do this. Don't worry about this and let the broker sort it out. Maybe to make the process easier have one broker get loans from two different lenders. BTW, some lenders give cashback per property. So, you can still get two cashback amounts from one lender. But still keep the securities separate. This will give you flexibility if you ever wanted to sell one, or refinance one.

  • Is it normal for lenders to allow borrowers to use 2 under collateralized assets as collateral against each other?

    • +1

      Yes. Generally, that is how most people start off with property investment. Use the equity in your home to get loan to buy investment property. Both properties will need to remain cross-collateralised till such time the value of investment property goes up enough for the loan to value ration dropping below 80% to avoid LMI.

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