Also called: Cross collateral, Cross security
Cross-collateralisation
Cross-collateralisation is where more than one asset secures the same debt, or one asset secures several facilities with the same lender. It gives the lender a wider claim if a default occurs.
What is a cross-collateralisation?
Cross-collateralisation is where more than one asset secures the same debt, or one asset secures several facilities with the same lender. It gives the lender a wider claim if a default occurs.
Example
A lender holds a home and a commercial property as security for both a business loan and an equipment facility.
Why it matters
It can improve pricing, but selling one asset later may require the lender's consent and a partial payout.