Down payment Question

[CDM]

Hi,

I have been reading this forum for the last few months and it has proven very useful - thanks

a few quick questions....


[list type=decimal][*]Are you able to use a line of credit for your down payment?[*]Would you tell your bank while asking for an increase, that this is the reason?Finally, would you want to do this if possible?[/list type=decimal] TIA

 

[GarthChapman]

QUOTE (CDM @ Aug 30 2009, 07:53 PM) Hi,

I have been reading this forum for the last few months and it has proven very useful - thanks

a few quick questions....


[list type=decimal][*]Are you able to use a line of credit for your down payment?[*]Would you tell your bank while asking for an increase, that this is the reason?Finally, would you want to do this if possible?[/list type=decimal]TIA

1. Yes
2. Yes
3. That depends. Does the investment of the leveraged capital make financial sense? Does it take you closer to your goals?

 

[Thomas Beyer]

QUOTE (CDM @ Aug 30 2009, 08:53 PM) .
Are you able to use a line of credit for your down payment?

yes you can .. but it is very hard to get a new mortgage for the 2nd property as you have to show verification of downpayment .. thus: move money to normal chequing account AT LEAST 3 month prior to mortgage application !

QUOTE (CDM @ Aug 30 2009, 08:53 PM) Would you tell your bank while asking for an increase, that this is the reason?
if they ask.

You can also call it "operating capital" for my real estate business .. it is the same but sounds more sophisticated to the bank.

QUOTE (CDM @ Aug 30 2009, 08:53 PM) .
Finally, would you want to do this if possible?

That is a function of risk .. opportunity .. potential .. and cash-flow !

 

[Nir]

Hello,
1. Yes
2. No - I tell the truth which is to allow using it not just for down payment but also property improvement, unexpected business needs, improvements etc. it also sounds better. even if you use it for downpayment now, in the future you will probably pay the balance and be able to use it for other purposes as mentioned.
3. Yes - if the investment generates positive cash flow and there is no cheaper alternative like a savings account. (usually you pay higher interest on a LOC than you get saving).
GL!

 

[MikeMcCrae]

In answer to # 2. Truth is always the right way to go. I always used the answer, "it is for investment purposes." It leaves you wide open to do what ever you like and you are absolutely telling the truth.

 

[fisher1]

Just recently I was looking to see if I could get a better rate on a loc and contacted a bank. When they asked me what I wanted it for I told them for a downpayment on an investment property. They called me and told me that they would not give me a loc for that.

 

[CDM]

Thank you all for your answers!!

Fisher - what did you do after they siad no? how did you get your DP

 

[GarthChapman]

QUOTE (fisher1 @ Aug 31 2009, 06:13 PM) Just recently I was looking to see if I could get a better rate on a loc and contacted a bank. When they asked me what I wanted it for I told them for a downpayment on an investment property. They called me and told me that they would not give me a loc for that.

First get the LOC, preferably a secured LOC, to be used for investment purposes. Then purchase a property and use the LOC as intended. If your bank won`t do this for you find another bank, or deal with a mortgage agent who is experienced with investment real estate.

 

[fisher1]

I already had a line of credit for years before. I was just shopping around to see if I could get a better rate.

 

[Thomas Beyer]

QUOTE (fisher1 @ Aug 31 2009, 08:30 PM) I already had a line of credit for years before. I was just shopping around to see if I could get a better rate.
Always shop around .. always have it at the MAX value .. and always use a bit of it so it shows activity on the computer ! Even max it out for a week or 2 once in a while .. then pay it down again !