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My house value increased in the past 3 years, is it possible to use that to obtain a line of credit (currently i have 1 single mortgage) and convert this to cash/use it as a downpayment so i can invest it in a second property?

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  • Can you edit and add country tag
    – Dheer
    Jul 24, 2017 at 3:02
  • Yes, but your debt to income ratio must be high enough to qualify, typically that means: monthly debt payments / monthly gross income < 0.43. They'd include your HELOC and new mortgage in that calculation. I'd argue it's not a great idea, but many people do it without issue.
    – Hart CO
    Jul 24, 2017 at 3:59
  • This is known as a start of a bubble.
    – Pete B.
    Jul 24, 2017 at 11:26

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What you are describing is called a Home Equity Line of Credit (HELOC). While the strategy you are describing is not impossible it would raise the amount of debt in your name and reduce your borrowing potential. A recent HELOC used to finance the down payment on a second property risks sending a signal of bad financial position to credit analysts and may further reduce your chances to obtain the credit approval.

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