HELOC or Refinance mortgage?

[Peter Morgan]

Hello

I am having a hard time wrapping my head around the HELOC.Can I consider HELOC as an adjunct to my primary mortgage?Say the remaining loan amount is 500k and say I have about 50k built up in equity.Would it make sense to have an HELOC on a MF rental property that was bought for 750k?

Thanks

[Jimmy Lieu]

HELOC is basically a credit card you get to borrow on the equity you have in a property. I believe most lenders will require you to have at least 20% equity in the property to qualify for a HELOC. When you get the HELOC, you can use it like a credit card which you can purchase stuff with it and you have to pay it off.

There's two periods: draw period and repayment period. The draw period is when you can use the HELOC like a credit card and repayment period when you have to pay back everything.

You can use the HELOC with up to around 75% of the total equity in a property. So with the 500k property, you can get up to a HELOC around 375K.

I have never used a HELOC but this is what I've read and have been told.