How To Use Your Current Home To Finance Your Property Investing
Everywhere you look, you will see a myriad of excellent property investment opportunities just waiting to be lapped up. For many would-be-successful property investors, the problem is never really finding the right kind of property to buy – the problem is finding the money to use for those purchases.
Of course, many would sooner go for a bank loan that let that wonderful opportunity pass them by. But what if the banks or lenders can’t help you with the cash you need, what then?
How you can use your current home to finance your property investing
One viable option is to use your current home to finance the second property. Yes, it can be done. As long as you have been responsible with the current home and have built up some equity, you can easily use that as an investment vehicle for the second purchase.
How does this work?
All you would have to do is to tap into that equity and use it as a line of credit with the banks. But to do that successfully, there are certain things that must happen. Here are some tips that will help you out:
1. Get your home inspected
Be sure that your home is ready for inspection. Any lender worth their salt will want to ensure that you are not taking them for a ride. So, if you have those unfinished remodelling projects, you might want to finish them first. An upgraded home is more valuable thus earns more equity. Get your home ready for inspection before you do anything else.
2. Find the right lender
Not all lenders offer favourable terms when it comes to home equity loans. You need to find a lender that is amenable to these types of agreements and one that offers you wonderful terms. Many lenders offer 80% loan-to-value ratios that should have you well on your way to financing the new property depending on how much your current home is actually worth.
3. Go through the application process with a solicitor
The one thing you do not want to do is enter into an agreement that will end up costing you your current home instead of helping you grow as a property investor. As sad as it is to say, not all lenders have the best intentions. If you do not read the terms or go through the application process properly, you might end up entering an agreement that is not favourable at all. Use a solicitor and ensure that everything is in order before you proceed.
Once all this is done, all you have to do is buy the new property, build up its equity and then go through the same process again for a third house and so on. Before you know it, you might just be a land mogul. It is a game of numbers and absolute financial discipline.