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by
Fri Jan 17, 2020 7:38 am
Forum: Home Loan Forum
Topic: Question about total mortgage after using equity for additional property
Replies: 2
Views: 81125

Re: Question about total mortgage after using equity for additional property

Thank you so much! I understand what you've said and this is great information.
by
Thu Jan 16, 2020 10:44 am
Forum: Home Loan Forum
Topic: Question about total mortgage after using equity for additional property
Replies: 2
Views: 81125

Question about total mortgage after using equity for additional property

I am trying to make sure I understand how equity works in terms of the final mortgage/loan repayments.

Here's what I understand:
My townhouse is currently valued at $590K. My outstanding loan is $348K, meaning I have $242K equity.
80% of my property's value is .8*590 = $472K, less the outstanding debt of $348K = $124K usable equity.

Here's where I need clarification:
  • Is it correct to say that in order to avoid LMI, I can get a new loan up to $620K (with $124K being 20% of 620)? 
  • Is it also correct to say that if I do this, my outstanding mortgages are (1) $348K on the original loan and (2) $620K-$124K = $496K. Therefore a total outstanding mortgage of $844K?
One last thing:
My husband and my finances are rather separate, and we want to keep it that way.
I have a tenant in my townhouse, that the mortgage on that is current 'taken care of'. (Note that the mortgage/townhouse is in my name only)
My idea is that I buy this new property (using the aforementioned equity) to live in, so that we stop renting. I buy it in my name only - the mortgage repayments be in my name only - but my husband contribute what essentially would be a 50% 'rent' payment to me.

Do you see any pros/cons in doing that?

Thanks so much!