Hi all, i bought an apartment for $230,000 in 2006 and recently got an offer for $300,000.
I dont want to sell as it brings a good return, however i want to use $150,000 equity to make another purchase.
I know what equity is, but i dont know how it works when it comes to banks and loans.
Can someone give me a rundown of what i am able to do with $150,000 equity.
Thanks
basically the bank is willing to lend you another 150k secured against the value of the house (equity is not based on what you were offered but what the bank values it at , usually more a conservative value and especially these days)
So say you want to but another place for 300k. If the bank agrees with that value they would normally lend up to 80% with no issues depending on your ability to repay (including rental income). That would mean they would provide 240k based on the target property. You would then fund the other 60k + costs from your own cash or from your 150k equity if you wanted the whole deal financed. This approach can open up a pandoras box of issues (cross collateralisation) if you link too many properties which can make life complex when you want to sell a piece of the chain, but that is another topic.
is this in any way helping with your question or am I just babbling?…..again
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