My real estate broker is advising me to borrow money against my current house for the down payment on a second house . I need to borrow about 50k. My current house has a principal balance of 80k and interest rate is 2.5%

If I take 50k out, total balance becomes 130k. So will I be paying 2.5% on 130k, or will this 50k be considered HELOC which has 5% interest rate?

The numbers above are not real, for example purposes only.

1 Answer 1


I am a real estate agent. I know you are in Canada, but will let you know that in the US, agents are not to supposed to offer this kind of advice. They can refer you to a bank or mortgage broker, but should not be giving this type of financial advice.

That said, it's a HELOC, it would be rare for your bank to be willing to just add to your mortgage at the current low rate. Still, ask the bank holding your loan.

Is the second home to rent out or a vacation/summer home for you to live in?

  • The second home is a joint home with my spouse because the current home is too small. Thank you. Vacation home in my salary is not possible. Living in Toronto is expensive.
    – Victor123
    Commented Jul 1, 2015 at 2:56
  • 3
    @Victor123 that is an important part of the question. What will you be doing with the first house? Commented Jul 1, 2015 at 10:10
  • I will put it on rent.
    – Victor123
    Commented Jul 2, 2015 at 14:53

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