Since English is not my first language, please excuse for any grammars. My parents are 55 years old. I am helping them to prepare for retirement so they can have extra income. I have an idea to create passive income, not sure if it makes sense to do it. The plan is to do cash-out refinance on their current home to take out equity to buy a rental property.
My parents house is about 80k remaining until they pay off the mortgage. As I've been doing some homework, most of lenders will do 75% LTV (Loan to Value)
My parents' house is estimated around 200k in the market. Cash-out refinance, the bank will give us 75%
$150,000 - $80,000 (still owe) = $70,000 (take this money out to put toward down payment of the new house for rental income)
Investor · Ontario · Member since 2015 · 486 posts · 250 votes
5y
Hey @Andy Tran Something to keep in mind is have your parents do a HELOC and or refinance on their primary home and close on that rental property with long term financing BEFORE they retire. The rates they will get while still working will be far better than the loan options available after they retire.