Getting a Heloc on a rental

[Amy Houghton]

I was wondering why lenders won't give helocs from the equity in a rental property.  Or if they do, its significantly less than if it was your primary home with a higher interest rate (9%).   Does anyone know a lender that will do this?  Thanks!

[Jay Hurst]

Quote from @Amy Houghton:

I was wondering why lenders won't give helocs from the equity in a rental property.  Or if they do, its significantly less than if it was your primary home with a higher interest rate (9%).   Does anyone know a lender that will do this?  Thanks!

 Investment properties have higher rates even when they are first postion relative to owner occupied properties. Non owner occupied properties default at a higher rate then do owner occupied. If you get into trouble, which mortgage are you going to stop paying first?  The property you live in or one you bought for an investment?  More risk means higher rate. 

Second mortages are again higher then first mortages even on owner occupied because they are again more risky then a first mortgage. They are higher loan to value, and they are in second postion. That means that second mortgage holders are often wiped out completly during a foreclosure. So, more risk on a first vs second means higher rate. 

Now you add both together for a second mortgage and on a investment property so the risk is higher therefore higher rates and lower LTV's.

That being said, we can go to up to 80% LTV but the higher the LTV the higher the rate.