How To Use Your Equity To Buy — Another Property

Most lenders cap your Combined Loan-to-Value (CLTV) ratio at 80% to 85%.

Equity is the difference between your home's current market value and your outstanding mortgage balance. However, lenders won't let you borrow 100% of it. how to use your equity to buy another property

If your home is worth $500,000 and you owe $300,000, and your lender caps CLTV at 80%: $500,000 × 0.80 = $400,000 (Maximum total debt allowed) Most lenders cap your Combined Loan-to-Value (CLTV) ratio

Using your home's equity to purchase another property is a strategy often called . It allows you to use the "unlocked" value of your current residence as a down payment or even the full purchase price for a new investment or vacation home without depleting your personal savings. Step 1: Calculate Your "Tappable" Equity 000 and you owe $300