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    Default Line of credit or mortgage

    We are planning on building again soon and we want to learn more about line of credits vs mortgage. Any experts on here or anyone with personal experience with lines of credits?

    We've had a mortgage for the last 10 years.
    We have at least 25% down

    Any recommendations on a lender? I've had my mortgage with a trust company for he last 8 years and tend to stay far away from the banks.

    Looking forward to learning advantages vs disadvantages.

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    Default Re: Line of credit or mortgage

    Originally posted by jesterme2007
    We have at least 25% down
    Your only choice is mortgage.

    HELOC vs Mortgage is only for people that owns ~60% or more of the home.

    Unless you are talking about bridge loans for your new build?
    Last edited by Xtrema; 03-27-2017 at 07:39 PM.

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    Default Re: Re: Line of credit or mortgage

    Originally posted by Xtrema


    Your only choice is mortgage.

    HELOC vs Mortgage is only for people that owns ~60% or more of the home.

    Unless you are talking about bridge loans for your new build?
    I'm not sure what you are trying to say but he can still get a HELOC with only putting 25% percent down.

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    Default Re: Re: Re: Line of credit or mortgage

    Originally posted by roopi


    I'm not sure what you are trying to say but he can still get a HELOC with only putting 25% percent down.
    How? I was told that you need to be close to or over 35% down for a bank/CU to even consider it.
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    HELOC can be had in combination with a mortgage. It's not one or the other.
    Source: I have both.
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    You can get a HELOC with anything over 20%.... but part of it will be fixed term as only 65% can be a heloc

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    Default Re: Re: Re: Line of credit or mortgage

    Originally posted by roopi


    I'm not sure what you are trying to say but he can still get a HELOC with only putting 25% percent down.
    The way I read OP's question is having HELOC INSTEAD of mortgage with only 25% down.

    Of course you can access 5% of that 25% down as HELOC.

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    Is there some advantage to running a HELOC instead of a mortgage?
    Quote Originally Posted by killramos View Post
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    You realize you are talking to the guy who made his own furniture out of salad bowls right?

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    Originally posted by ExtraSlow
    Is there some advantage to running a HELOC instead of a mortgage?
    If you can write off the interest, sure... gives you more flexibility in directing your monthly cash flow since you only have to pay interest payments

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    Are you writing off HELOC interest in a primary residence or just in a rental property?

    And….

    In your rental property are you allowed to continually draw money out off your HELOC to keep you interest payment write off for income tax purposes as high as possible?

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    Originally posted by 88CRX
    Are you writing off HELOC interest in a primary residence or just in a rental property?

    And….

    In your rental property are you allowed to continually draw money out off your HELOC to keep you interest payment write off for income tax purposes as high as possible?
    If you are using the debt on the property it's secured against, as a primary the most you could do is write off a portion (home office) if self employed... could write it all off if used towards investments though ie. liquidate investments, pay off house, get heloc, reinvest

    For rentals yes, you could draw out the full amount, then make interest only payments, which would mean you'd always have the same amount of principal remaining till you decided to make a large lump sum payment... or increase your monthly payment

    Of course this is all OAC

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    Ok thanks for the replies. Is this something that I would need to discuss with a bank directly?

    Didn't know if a mortgage broker can handle this. I know my trust company I deal with don't offer this.

    We have two options we can sell the place we live in now and use the Equity plus our other funds and we could come up with way more than 25%

    But we were hoping to keep it as a rental as the markets not overly hot right now. If we did the rental way we could come up with around 25%

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    Broker should handle this easily.

    I've always had conventional mortgage and a HELOC.
    Quote Originally Posted by killramos View Post
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    You realize you are talking to the guy who made his own furniture out of salad bowls right?

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    Originally posted by jesterme2007
    Ok thanks for the replies. Is this something that I would need to discuss with a bank directly?

    Didn't know if a mortgage broker can handle this. I know my trust company I deal with don't offer this.

    We have two options we can sell the place we live in now and use the Equity plus our other funds and we could come up with way more than 25%

    But we were hoping to keep it as a rental as the markets not overly hot right now. If we did the rental way we could come up with around 25%
    Talk to a broker.

    As long as you have income to cover both mortgages with over 20% down on both places, it should not be a problem.

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    Originally posted by jesterme2007
    Ok thanks for the replies. Is this something that I would need to discuss with a bank directly?

    Didn't know if a mortgage broker can handle this. I know my trust company I deal with don't offer this.

    We have two options we can sell the place we live in now and use the Equity plus our other funds and we could come up with way more than 25%

    But we were hoping to keep it as a rental as the markets not overly hot right now. If we did the rental way we could come up with around 25%
    Definitely talk to a broker.

    If you want to keep your current primary residence as a rental you'll want to take as much equity out of it as possible and put it towards your new primary residence to maximize interest deductibility. There's a very specific way that you have to do this to stay on-side with tax rules.

    Whether you HELOC or Mortgage would probably come down to how much flexibility you need (timeline for selling the current place and cash flow).
    Originally posted by max_boost
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