ductom81
2015-01-08 09:17:16
- #1
1. Bridge financing: You receive a loan equivalent to your (expected) profit. This loan has a short term, e.g. one year, and is not repaid during this period. At the end of the term, the loan is repaid from the sales proceeds or profit from the sale. It serves as an advance/interim financing of your currently still tied-up equity in bricks.
2. House as a trump card: You provide the then rented house (increasing your income) as collateral for the bank, which also finances your new house. You then get a correspondingly higher loan than if you only encumber the new house and bring in cash (thus also increasing the total installment). Depending on income from rentals and leases and the level of loan interest, this can also be tax-beneficial. However, this should be better discussed with a tax advisor (also e.g. a possible division of loans and allocation to the rented house).
do both ways at least temporarily replace equity with cash?