Be the bank: Borrowing to lend

Investing requires access to capital. While some investors use their own savings, others find alternative ways to invest by borrowing funds through leveraging existing equity in their real estate. Because earnings from mortgage investments are greater than the cost to borrow from conventional lenders, borrowing against your property can prove to be a profitable and rewarding investment strategy.

Below are two examples of borrowing funds against your real estate to lend to mortgages. The first option considers a Mortgage Refinance, where you can access more of the equity in your property and a portion of your interest payments go towards your principal pay down. The second option considers a Home Equity Line Of Credit which consists of interest only payments. This is a more flexible option, but will limit a borrower on how much they can extract.

Numbers rounded to the nearest dollar. *Rates and terms subject to fluctuation. OAC. **80% Loan to value ratio is the typical maximum on a refinance.
***65% Loan to value ration is the typical maximum on a secured line of credit.
This example is intended for informational purposes only and should not be relied upon for making an investment decision.

June 11, 2019