condo and new house

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I have a condo which has appreciated in value quite greatly. I am planning to buy a house and use as a permanent residence and rent out the condo. Can I use the equity in my condo for down payment on my new house by combining the 2 properties into a single mortgage?

blue · Posted: Thu Jun 29, 2006 4:38 pm Post subject:

Hi Ethan,

It is quite possible. But it is not done very often as borrowers seldom find it to be advantageous and lenders also dislike the involved complexities.

jameshogg · Posted: Thu Jun 29, 2006 5:10 pm Post subject:

Hi Ethan,

Let me explain the actual scenario in detail to you.

In such a circumstance the lender will combine the property that will be used as permanent residence and the one which will be used as an investment.

Loans on investment properties are considered riskier and carry a higher price. And for such a loan the lender will almost certainly price it as an investment loan. It will mean that if you take a combined loan, you will have to pay a premium price to finance your home purchase.

Additional point to be considered is that such an option will hamper your ability to sell the condo in future. To sell the condo you will have to pay off the entire loan, which could force you to sell your home as well.

James

blue · Posted: Thu Jun 29, 2006 5:44 pm Post subject:

Ethan, it would be much better for you if you take out a home equity loan on your condo for the amount of down payment on your new home purchase.

Another option would be a cash-out refinance where you refinance the loan on the condo for an amount equal to the loan balance plus the down payment on the new home.

You can select any of these options as these will be less costly and you will also retain the freedom of selling the condo.

Blue

Caron

Hi,

You can take either a home equity loan or a line of credit as per your convenience. You can use the cash as down payment and take another mortgage against your new home from the same lender. Then you can combine the 2 properties into a single mortgage with a suitable mix-and-match loan from the lender. The mix-and-match loan allows you to combine 2 or more mortgage products from the lender in order to get the mix you want.

Thanks,

Caron.

ckalvesmaki · Posted: Tue Jul 11, 2006 9:39 pm Post subject:

Caron,

I have been in this business for 10+ years and never heard of a "mix and match loan"......You can however get a blanket mortgage for both properties......this is more of a commercial type of loan and the terms are not very attractive......depending on your equity position you may be better off doing a total refi on the condo and use the cash out to cover the down payment on the new house.......a good broker can work up the math with you to see what makes the most sense.

Caron · Posted: Tue Jul 11, 2006 11:06 pm Post subject: RE:

Hi Kalvesmaki,

Good to see you here.

As far as I know, the mix and match products are quite popular in the UK mortgage industry. And, since Ethan haven't mentioned the state where he resides, so I provided home with generalized information.

Anyway, thanks for your information. Hope to see you here frequently.

Thanks,

Caron.

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