Real Estate

Taking out Equity from Current Condos - Possible in this Situation?

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  • Aug 17th, 2020 9:41 pm
[OP]
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Aug 11, 2011
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Toronto

Taking out Equity from Current Condos - Possible in this Situation?

Situation -

Income 80k via dividends
Self Employed
1 rental condo value 600k (200k left)
1 principle residence value 700k (310k left)

Is there any way i can pull out the equity to use for the purchase of a new principal residence while keeping the 2 condos as rentals?

My Broker is telling me I would need to re-qualify for pulling out equity, and in the current situation I would not qualify. (since i went self employed ~3 years ago and my ratios would be too high).


TIA
Last edited by MikeTO2 on Aug 16th, 2020 7:22 pm, edited 2 times in total.
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Dec 23, 2012
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RICHMOND HILL
I am in about 900k mortgage debt right now that I got on a 90k salary and about 40k rental income. are you saying those properties are mortgage free? in that case I don't see why you couldn't get a decent chunk and still have room for another mortgage.
Deal Fanatic
Feb 9, 2009
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MikeTO2 wrote: Situation -

Income 80k via dividends
Self Employed
1 rental condo value 600k
1 principle residence value 700k

Is there any way i can pull out the equity to use for the purchase of a new principal residence while keeping the 2 condos as rentals?

My MS is telling me I would need to re-qualify for pulling out equity, and in the current situation I would not qualify. (since i went self employed ~3 years ago and my ratios would be too high).


TIA
all comes down to how much mortgage you got on them..
Deal Addict
Mar 3, 2018
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Something else to consider is the interest on funds pulled from a rental condo to purchase a principal residence will not be tax deductible. Although you could set up a Smith Maneuver depending on the cost to make it deductible over time.
[OP]
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Sanyo wrote: all comes down to how much mortgage you got on them..
Updated OP.
1 rental condo value 600k (200k left)
1 principle residence value 700k (310k left)

Looking to pull about 100k-150k for a downpayment for next place.
[OP]
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Mosho1 wrote: I am in about 900k mortgage debt right now that I got on a 90k salary and about 40k rental income. are you saying those properties are mortgage free? in that case I don't see why you couldn't get a decent chunk and still have room for another mortgage.
No, sorry updated post with values.
1 rental condo value 600k (200k left)
1 principle residence value 700k (310k left)
Deal Guru
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Mar 23, 2008
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MikeTO2 wrote: Situation -

Income 80k via dividends
Self Employed
1 rental condo value 600k (200k left)
1 principle residence value 700k (310k left)

Is there any way i can pull out the equity to use for the purchase of a new principal residence while keeping the 2 condos as rentals?

My MS is telling me I would need to re-qualify for pulling out equity, and in the current situation I would not qualify. (since i went self employed ~3 years ago and my ratios would be too high).


TIA
Who or what is your "MS"? Have you talked to a broker, if that's just your bank's "mortgage specialist"?

C
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Dec 23, 2012
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RICHMOND HILL
MikeTO2 wrote: No, sorry updated post with values.
1 rental condo value 600k (200k left)
1 principle residence value 700k (310k left)
I see. well, while you could probably get 150k, the problem is that you need another mortgage - and for that you probably don't have enough income. a good mortgage broker can do the math for you though across a wide range of lenders.
[OP]
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CNeufeld wrote: Who or what is your "MS"? Have you talked to a broker, if that's just your bank's "mortgage specialist"?

C
Yah sorry - meant to say broker (mortgage specialist)
[OP]
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Mosho1 wrote: I see. well, while you could probably get 150k, the problem is that you need another mortgage - and for that you probably don't have enough income. a good mortgage broker can do the math for you though across a wide range of lenders.
150k from pulling equity?
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Jan 22, 2012
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Bradford
MikeTO2 wrote: 150k from pulling equity?
How much would the property your purchasing be?
Likely won’t be able to have 3 mortgages with your income. You’ll now owe 660,000 on those 2 properties combined plus whatever your trying to buy.
[OP]
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Topher86 wrote: How much would the property your purchasing be?
Likely won’t be able to have 3 mortgages with your income. You’ll now owe 660,000 on those 2 properties combined plus whatever your trying to buy.
5-600k
ok thanks.

Broker said its doable for something around 500k with a B lender- but I can't take out any equity, and need to get the downpayment from other sources.
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DaveTheDude wrote: Something else to consider is the interest on funds pulled from a rental condo to purchase a principal residence will not be tax deductible. Although you could set up a Smith Maneuver depending on the cost to make it deductible over time.
Thanks - looking into that...
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Will definitely need to requalify to pull equity out. A good broker or MS can do the application as one to see if you qualify for the equity pull out and for the new mortgage. Can also use projected rental income for the other property which can add some income. With rental offsets, it might be possible.
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