Using equity to fund the purchase of an investment property can be a smart financial move, as it allows you to access the capital you have built up in your primary residence or other properties in order to invest in a new property. Here are some key things to consider when using equity to finance an investment property purchase:

1. Understand how equity works: Equity is the difference between the value of your property and any outstanding mortgage debt. For example, if your property is worth $500,000 and you have a mortgage balance of $200,000, your equity would be $300,000. You can use this equity to fund the purchase of an investment property by taking out a second mortgage or home equity loan on your primary residence.
2. Calculate how much equity you have available: Before you start looking for investment properties, it’s important to know how much equity you have available to use. This will help you determine how much you can afford to borrow and what type of property you can afford. You can calculate your equity by subtracting your mortgage balance from the value of your property.
3. Consider the risks and benefits: Using equity to fund an investment property purchase can be a risky move, as you are putting your primary residence or other properties up as collateral. If the investment property doesn’t perform as well as you had hoped, you could end up losing your primary residence or other properties. On the other hand, using equity to fund an investment property can also be a smart financial move, as it allows you to access capital without having to come up with a large down payment or take on additional debt.
4. Explore your financing options: There are several different ways to use equity to finance an investment property purchase, including taking out a home equity loan or second mortgage on your primary residence, refinancing your mortgage to access equity, or selling a property and using the proceeds to fund the investment property purchase. It’s important to explore all of your options and choose the one that best meets your financial needs and goals.
5. Seek professional advice: If you are considering using equity to fund an investment property purchase, it’s a good idea to seek professional advice from a financial advisor or mortgage broker. They can help you understand the risks and benefits of using equity and help you choose the best financing option for your situation.

At Pure Real Estate, we have an in-house finance broker available to assist with any financial needs. Contact us today to find out more.