Using the Equity in your Current Home to Buy a New One
You’ve spent weeks, even months searching for your dream home. You’ve viewed countless listings with your realtor and attended several open houses on your own. Finally, your hard work has paid off. You’ve found the home of your dreams and it falls with your budget; however, reality now sinks in. You’re going need to sell your current home in order to make the down payment on the new one and the fear that your dream home will be sold to someone else while this happens becomes real.
Fear not. There are ways you can leverage the equity in your home to prevent this from happening.
Option 1 – Take out a swing loan or bridge loan. These types of loans allow you to borrow up to 85% of the available equity in your current home when you list it with a realtor or have an agreement of sale. Typically, you pay interest only so the monthly payment is usually less than a home equity line of credit. Once you sell your current home, you would pay any existing balance on the current mortgage and pay the swing loan off. The term of these loans is typically twelve months you’ll need to have your home sold and the loan paid off before that.
Option 2 – Another option is to keep your current home and use it as a rental property. This allows you to take out a home equity line of credit and use the available funds to make a down payment on your new home while earning rental income to meet the mortgage obligations on the rental home. Home equity funds can also be used to make repairs or improvements in the home to make it more attractive to renters and future buyers. With the ENB HomeLine, you can borrow up to 85% of your home’s value less your current mortgage balance.