HELOC on Primary Residence vs. Investment

8 Replies

Banks have different terms for their HELOC lending for primary residence versus investment, giving more borrowing power and a lower interest rate on the primary residence. Let's say I get a HELOC on my primary residence. Then, a couple months later, I move out making the home an investment property. I already have the HELOC in place, but is the bank going to find out and change their terms now that the property is a rental?

IF the bank found out you moved, they would not change their terms, but would require a pay-off to occur. The strategy you are inquiring about is used often. Your primary residence is your primary residence because you have the intent to live there. If your intent changes after you take out a HELOC, and you move, and keep making your payments, chances are the bank will not care where you are living.

@Darren Eady Very helpful response, thank you! I did talk to my bank today, and I didn't realize that getting a HELOC would be so easy. It's on the consumer product side like a auto loan, not a complicated mortgage. And if my bank did want to change the terms on of the loan based on the intent, it would just be an $85 filling fee.

In my experience on my own loans Ive never had a bank call the note Julie but could it happen? Sure possibly I would recommend looking at the conditions and covenants on the note.

BECU does investment HELOC's to 70% a lot of credit unions go to 70%.

I know of a couple niche banks that go to 80% but these are few and far between especially on investment properties.

BECU for instance does up to 95% on primary but they do severely limit it to 70% on an investment property.

You'd also have to look at the terms in the fine print. For instance, I have a HELOC on what used to be my primary residence, but it's now a rental. One of the stipulations was that I had to live there for a year after opening the HELOC, but after that I was able to move with no issue.

@Albert Bui @John Sanderson Interesting to know what people's experiences are with HELOCs. The one year rule sounds similar to owner occupied mortgages too.

Does anyone know which bank will give HELOC for rental property?

@Madhan S. Most do, just different rates than for a primary. Call your favorite 10 banks in your town and find out.

I asked my bank about this and they said that the HELOC would need to be closed and re-opened under the appropriate category if I converted the home to a rental. Different banks may have different policies, so I would just ask them.

While I think it's pretty unlikely the bank would find out, I say it's better to avoid the gray area and sleep well at night.

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