Can I use a HELOC to buy another property?

Yes, you can use a HELOC to buy another property. 

Home Equity Line of Credit, or HELOC, are a powerful tool that allows homeowners access to the equity they have built in their property through a line of credit. One popular use for a HELOC is helping fund the purchase of a rental, investment or secondary property. 

Are you looking to use your home equity to purchase another property? Begin the process with an online HELOC application. 

Which types of properties can I buy with a HELOC?

You can use a HELOC to help you buy a number of different property types. If you are looking to purchase a home with a HELOC, check the property type to see if it qualifies.

For any additional questions about the property type you are hoping to purchase with a HELOC, talk to a Loan Officer. 

Will a HELOC work for a down payment on another property

Yes, a Home Equity Line of Credit will work for a down payment on another property. 

Typically, the funds you receive through a HELOC will not cover the full amount needed to purchase a home. However, your HELOC funds could cover a significant portion, if not the entire down payment needed to purchase another home. Allowing you to get another home while keeping your savings intact. 

Is using a HELOC to buy another property a good idea

Yes, using a HELOC to buy another property can be a good idea depending on your financial situation and needs. 

A HELOC is a great resource for homeowners who have significant equity in their home. HELOCs typically come with easier qualifications and lower interest rates as they use your first home as collateral. 

What are the benefits of a HELOC for investments?

Some of the benefits of investing your HELOC funds into another property that homeowners see are: 

Preserve savings

Accessing your home equity through a HELOC allows you to hold onto any savings you have while purchasing property.  

Preserving your savings lets you have a safety net in case any unexpected expenses come up. Not using your savings to purchase a property could also let you use that money for any improvements on your investment home you hope to make. 

Access lower borrowing costs

HELOCs tend to have a lower borrowing costs as closing costs are typically smaller and you will only pay interest on the amount you borrow. 

Since your loan is backed by your home, this typically results in lower closing costs than other loan types. You will also only pay interest on the amount you borrow with a HELOC instead of your total approved amount.  

Build a real estate portfolio

If you are hoping to diversify your investments, using your HELOC to buy a home could do that by building out your real estate portfolio. Real estate properties often appreciate in value over time, especially in the right markets, which can increase your net worth. 

Potential for rental income

Are you looking for an additional source of income? Using your HELOC to purchase a rental property could offer a potential stream of income. The income through renting out the property could help cover the cost of HELOC interest and principal payments. 

Flexible borrowing

HELOCs are a flexible borrowing option as you can make draws on your approved amount as you need, instead of just being given your full amount.  

It is similar to a credit card, where you can access your funds as expenses arise. With a HELOC you will only have to repay the principal, and interest, on what you borrow, not your total loan amount.  

Potential for interest-only payments during draw period

While you are accessing your HELOC funds you are only required to make interest payments on the amount you borrowed. Only making interest payments during the first few years of your HELOC can make the initial cost of borrowing the funds more affordable. 

How can I start the HELOC application process

Have you decided that a HELOC could help achieve your financial goals? Start the process with an online application.  

The HELOC application process with Rate can be completed in as little as five minutes. Traditional HELOCs could take 45 to 60 days before you can access your funds. HELOCs with Rate give you access to your funds in as soon as five days. Allowing you to purchase another property without the long wait. 

Don’t wait to access your HELOC funds, start the application process today.