Why Does Using Equity to Buy Investment Property Make Financial Sense?

Why does using equity to buy investment property make financial sense?

Well, your home equity is not doing anything for you if it is sitting untouched in your property.
• Your equity is doing nothing to help build your net worth
• Your equity is doing nothing to help your property appreciate any faster in value

What could the equity you have in your home do for you if the money was used to buy investment property?

• You will make money from the rental income of the investment property, and
• You will make money from an increase in the value of the investment property itself.

Owning an investment property is a great way to add extra income. However, it can sometimes be difficult to obtain a loan for a property you are not living in, especially if you currently have a mortgage.

By using your home’s equity to buy investment property, you can secure the finances needed to achieve your investment goals.
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As a homeowner, you are in a unique borrowing position since you can borrow against the equity in your home with the right approvals. Equity is the difference between the current appraised value of your home and the amount owed on the first mortgage. Using your equity to buy investment property makes financial sense.

Benefits of Using Equity to Buy Investment Property

If you are interested in purchasing an investment property, lenders are typically more comfortable adding to your current mortgage with a home equity loan because they are safeguarded by the fact that your loan is secured against your home. A homeowner who uses their primary home’s equity will work harder to pay off the loan and will be much less prone to miss payments since the home is in jeopardy.
Borrowing from your home’s equity instead of taking out a mortgage on your investment property can save you from the inconvenience and potential expense of getting a traditional investment mortgage. Using the equity you have built up may be one of the most cost effective ways to lower your borrowing costs.
To access your home’s equity to buy an investment property, contact a qualified mortgage specialist who will explain the types of home equity loans available to help you secure the finances you need to achieve your investment goals. 


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