Want To Buy Property With No Deposit – Read On
There is no doubt that buying a home is one of the most vital decisions in the life of a person. It is perhaps a one-time investment and therefore quite a few things must be considered and put in place. Though many of us might manage to buy the first property, we may find things a bit difficult when we plan to buy the second one. This is because you may not have enough cash deposit available with you. You may have come across information that buying a second property without deposit is not possible. This is not actually true. Hence if you are looking for the right answer to the question, how to buy a property with no deposit then it is quite likely that you will find quite a few things interesting over the next few lines.
Your Home Could Help You
If you have a home of your own and if you have been its owner for a few years, you have a good chance to buy a second property without deposit. This is because you could have built some decent equity over the years and this can be useful when you are planning to buy a second property. You can get a line of credit against your first home and the same can be used to fund the deposit amount for your second property. When a line of credit is set against your existing property, you can borrow against the equity of your existing home. You only have to pay interest on the amount you draw. This is called leveraging and is considered a nice way to find your deposit for your second property.
How Does This Help
The concept of leveraging is quite simple. The equity of your home is nothing but the current value of the property and the balance that remains against your mortgage. Hence you could make use of this difference and borrow money to meet your deposit expenses for your second property. As a borrower you can access almost 80% of the equity which your property has been able to accumulate over the years. This certainly is no small amount and in most cases it can help you to fund the deposit money required for your second home.
Why Is It Beneficial
There are quite a few benefits as far as this form of financing your deposit is concerned. Since you will be leveraging your equity against your first property, you will not be burdened with huge interest costs. You will only have to pay interest for the borrowing you actually make. In most cases, the deposit cost will never exceed 50 to 60% of your equity as far as the first property is concerned. If you look around, do some research and then move forward you will be able to find out a number of options by which you can raise deposit for your second home. It is a new concept but it certainly is gaining in popularity and making many homeowners to aspire for a second property.
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