Is it OK to use home equity for a downpayment?

by Troy Coombs
(Newfoundland)

Hi,

I'm wondering if it's OK to use home equity in my primary residence for a 20% downpayment on an investment property? The property I'm looking at will require a $26000 downpayment and net $450/month.

Thanks,
Troy Coombs

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May 20, 2011
 RE: Using Home Equity For A Down Payment
by: Tom Karadza

Hi Troy,

Thanks for your question!

We work with a lot of investors and many of them are tapping into equity to make investment purchases. So it's done very often. You just don't want to over extend yourself and some banks will have criteria on where you can get your down payment from and where you can't... so you'll want to check that out with your mortgage broker before you begin.

We're fans of that strategy as long as you don't over extend yourself!

Tom

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