Can I use the equity in my property to buy a second property?
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broddy
Apprentice
Joined: 10 Aug 2005
Posts: 2
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 Posted: 04/29/08 - 05:08 Post subject: |
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I have a house that paying mortgage for. I would also like to buy another for my son. A friend of mine told me that maybe I could use my home equity for this purchase. Can I use the equity in my property to buy a second property? Would that be a good deal if it's possible?
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rocky
Apprentice
Joined: 09 Apr 2008
Posts: 2
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| Posted: 05/28/08 - 23:34 Post subject: |
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Home equity is part of your ownership of the house. That means that you are not the only owner until mortgage is paid off. Since you are still in that process, you have an option to borrow money against equity. This is meant for large amounts but you should check how much you could borrow. It depends on market value of your house and how much mortgage have you paid. Interest rates are not high, so it seems like a good idea. There is also a possibility for tax savings because interest is considered as tax deductible. Home equity loan is often considered for paying other debts with higher interests, but if you are allowed to take as much as you need, you should take it. If you want to take a lump sum go for second mortgage to get in fixed time. Another way is to get the home equity line which means that you are taking credit. Inform about APR to decide which way to choose, because they are differently calculated. Your choice also depends on your mortgage and your financial situation.
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