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?
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!