HELOC on an investment property?

6 Replies

Greetings all,

I have been trying to get creative with financing on an investment property and have run into snags. I was denied a HELOC or even just an equity loan on an investment property that I own and wanted to know if this is the norm or if it was the bank I used. Basically I have a home that I currently rent out that I wanted to draw out some of the equity on in order to put money down on another purchase. I currently owe $203,000 on it and the home is valued at $266,000 so i was basically trying to pull $20,000 out but was denied by the bank. They stated that I could have pulled out $10,000 had it been my primary residence. This is all with excellent credit.

Will this be a standard that I will face as I keep trying as my credit takes a hit every time a bank considers me for one of these, or is this an outlier? Also are there any lenders that others have used in the past that are more friendly towards investors? I am not concerned about getting the loan for financing the property, but the lender I am using does not do HELOCs or equity loans. I do not want to drain my emergency fund in order to have the funds to pay for the down payment and would rather leverage the equity I already have. I appreciate any help that can be provided by anyone here.

Tim

I've used TD Bank for several Helocs and just recently GTE Financial Federal Credit Union (in FL). You just need to call around to find lenders that will do these loans on investment properties. They're out there.

@Timothy Trewin

I 2nd the TD bank connection.  Just make sure you do the math on their Equity Line.  It has some serious snags associated with it.  Plus it is expensive.

You can't get a HELOC on an investment property because a HELOC is a HOME equity line. The investment property is not your home

Some banks will offer lines based on non owner occupied property but they generally will not call it a HELOC. and the "Mortgage Guy" may not even know they offer it. Talk to the commercial lender.

80% OF $266 is $ 212  so you really don't have much usable equity.

Medium crab1 copyNed Carey, Crab Properties LLC | http://baltimorerealestateinvestingblog.com/

Originally posted by Aly NA:

I've used TD Bank for several Helocs and just recently GTE Financial Federal Credit Union (in FL). You just need to call around to find lenders that will do these loans on investment properties. They're out there.

 Did GTE offer better terms?

@Ned Carey beat me to it. If you ask for a HELOC, you will get no where. You want a LOC of some sort. It's like a "listed foreclosure" which doesn't exist either. It's an REO. This industry overloads and misuses terms so frequently....

@Wilson Churchill , GTE offered 70% LTV, 3.75% for 20 years P&I with about $600 in fees, payable from the line.

Our last Heloc from TD Bank was a couple of years ago, and it was $100 application fee, 10 years interest only, 4.25% and maybe 60% LTV....I don't remember exactly. There is a $50 annual maintenance fee.