Leverage Primary Home & Loan Against Personal Business?
Hi All,
I am close friends with a couple and I would love to see them create an asset by holding on to their primary home. I've brainstormed ideas with her about various financing options ... but I'm afraid I simply don't have the experience to provide any real solutions. I am hoping that someone may have a great idea out there! Here is the scenario ...
Primary Home ~ Value $500k with approx. $175k in equity. She owns a hair salon business (2 yrs old). First year broke even, 2nd year showed net profit of $40k. She pays herself a salary of ~ $75k/year. He is employed by a company also showing $75k/yr.
They are looking to upgrade to a larger home and need the down payment. Estimate cost of new home is $800k and will require 20% down. They have $30k in savings so they are $130k short.
Couldn't they loan the $130k against their primary home? And/or against profits of the business? In your experience, would the bank mortgaging the new home frown upon this?
Their existing home is in a good rental market in CA and they would be in the positive immediately. I want everyone to have success in owning rental property so really appreciate any creative ideas you may have!!
Many thanks in advance!
Lorraine