Quote:
Originally Posted by Mortgage Made Easy
Hi Jimmy,
Yes it is possible to use some of the equity in the current house for the purchase of the NEW home. Depending on the current mortgage setup, we would look at a refinance to assist in qualifying (if needed) but to also ensure you are cash flow positive for renting.
You can refinance up to 80% of the current home to access the equity. Based on $420,000 value, you would be able to refi up to $336,000 getting access to $166,000.
This will give you 20% down payment ($110,000 on $550,000 purchase) on the new home and some extra if needed for renovations you were talking about.
Look forward to hearing from you ~ Tim (will PM as well)
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Thanks for this. I am in almost the exact same position, although I'm hoping I can convince my wife to wait a few more years before we upgrade.
I've got a question on the tax implications of doing this. I know in Canada you do not pay capital gains tax on your principal residence, but you do on income properties. Therefore I would imagine you would get the house you live in appraised before you move out and then when you sell it in the future you only pay the capital gains from that appraised value. Is this correct?
Also, would it make sense to maximize the leverage on investment property versus your principal residence due to the interest on investments being tax deductible?