Learn how to manage two separate transactions that are not cross-securitized. On one deal, you create a top-up loan to release equity from a property. In the other deal, secure financing for a new purchase.
Contents
Prerequisites
Video walkthrough
Creating the purchase funding position
Creating the refi funding position
Calculating the base loan
Calculating the loan splits
Client presentation
Duplicating the deal
Related articles
Prerequisites
Know how to create a funding position.
Video walkthrough
How to refinance a loan to purchase another property.
Creating the Purchase funding position
Create a funding position for the proposed real estate purchase. In the screenshot below, the client needs about $113,000 (all figures rounded) to close the deal. For this demonstration, we assume the client does not have cash on hand to cover the shortfall, so they apply for a refinance loan to pull out equity from a property they own.
Make a note of the $113k shortfall. We'll need that number when we create a second funding position.
Scroll down the page and create a loan split. Click Save and then rename the funding position (e.g. 500k purchase).
Creating the refi funding position
Click the Add New Funding Position button at the top of the page. A form displays.
We create a loan top-up for a client property that has appreciated in value.
Enter a name for the funding position.
Go to the Deal Type field and select Refinance/Debt Consolidation.
Select a lender.
Click Save.
Go to the Funding Position Details section and fill in the fields. The information you add here should reflect the current property valuation and loan value. In this example, the property valuation is $1,000,000, and the loan is $600,000. We leave the Base Loan field blank for the moment.
Calculating the base loan
The new Base Loan number is the loan on the current property (about $600k) plus the cash shortfall on the proposed property loan (about $113k). Add them together, and the new Base Loan amount is $713,000. That generates a cash surplus of about $113k, enough to cover the deposit and cost of the proposed property loan.
Calculating the loan splits
Scroll down to the next section and click the Calculate Loan Splits button. Enter two values: one for the original loan on the current property ($600k) and one for the cash deposit on the proposed property loan ($113k). Click Apply and Yes in the confirmation popup.
Go to each Loan Splits section and add product information. Depending on the deal, one property might be classified as Owner Occupied and the other as Investment. Click Save.
Client presentation
With two funding positions complete, the broker can export the files as PDFs and show the client the cost of the second property purchase and the cost of equity release. Optionally, the broker can create a client-facing proposal.
Duplicating the deal
Assuming the client likes the proposal and is ready to proceed, the next step is duplicating the deal.
Go to the top of the deal page.
Click the More button.
Select Duplicate Deal. A popup displays.
In the popup:
Rename the duplicate record.
Check the Funding Position box (this copies the current funding positions into the new deal).
Click the field and select a stage for the duplicated deal.
Click Duplicate. The duplicated deal displays on the screen.
To clean up your files:
Go to the panel and select Funding.
Go to the equity release funding position.
Click the three-dot icon and select Set Default.
In the end, you should have two deals with two different default funding positions.
Deal |
Default funding position |
Original home loan |
refinance to pull out equity |
Proposed purchase |
loan to purchase a residential property |
Related articles
Funding Positions: Using Client Advices (Loan Submission, Formal, Ready to Settle and Settlement).
Funding Positions for Multiple Securities (Crossed), Purchase and Refinance