Buying an investment property
If I had equity of 500,000 in my home (with a small mortgage left to pay) and wanted to buy a $450,000 investment property to rent out – please explain how that works when it comes to the repayments.
What would the “deposit” be calculated at?
I’m trying to figure out if the repayments (via rent) would be viable?
In: Mathematics
You take out a loan against the $500,000 of equity in your home. Now you owe the bank monthly payments to repay that loan.
If you just buy the $450k property outright, then…you just bought it outright. You own it now. There is no bank involved; there are no payments involved. You will still have to pay yearly property taxes on it.
If you take out a mortgage to buy the $450k property, then you’d also have monthly payments due to *that* bank for *that* mortgage.
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