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Loan that doesn’t require current home equity as collateral?

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  • Posts 2
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Lenny Eckstein

posted about 1 month ago

I’m about to buy my first investment property (rental condo) using 180k drawn from a heloc against my current home. My plan has been to search for a conventional loan, over the next few months, at a 30yr fixed rate to quickly pay back this heloc.

The two lenders that I’ve spoken two thus far both were intent on a mortgage being secured with my home (valued at around 650k and owned outright). This would certainly be the easiest arrangement but I was kinda hoping to remove this home from the equation. Is there any scenario or loan structure that I might find somewhere that will not seek to leverage my primary home, but instead this soon to be acquired condo as collateral on the loan?

Thanks

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Check Rosette Top Subjects:
Analyze Deals, Taxes & Accounting, and Maintenance
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Mike McCarthy
Investor from Philadelphia, Pennsylvania

replied about 1 month ago

@Lenny Eckstein are you in the US? I’ve never heard of another property being used as collateral for a conventional mortgage.

Unless the Mortgage you are requesting is way over the 75-85% LTV of the condo, you should be able to get a mortgage just on that property. Of corse the bank will review your overall financial situation, but cross-collateralization seems like something more for a commercial/portfolio loan.

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Lenny Eckstein

replied about 1 month ago

@Mike McCarthy - thanks for weighing in. That’s good info. And yes, I’m in the US.

I’m going to reapproach these lenders and clarify my intentions. In an effort to determine a full range of flexibility through this loan, I may have been a bit ambiguous in my ask.

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Willy Vasquez morales
from Manchester, New Hampshire

replied about 1 month ago

Ask the lender why you can't use the subject property as the collateral. Each property should be able to be used as its own collateral. You might need 20% as not many will do 100% ltv. 

Reach out to small bank or credit unions

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