Use existing property as equity?

2021-02-03 09:32:28

You cannot "contribute" the rented apartment as equity. With the financing requirement of 540k, you basically have a 100%+ financing. More expensive than the classic mortgage loan with 60/80/95/xx% collateralization. The rent income will be credited to you by the bank (is that included in your household income?).

I consider it feasible, but expensive.

2021-02-03 09:53:14

We own a rented existing property (current market value approx. €280,000, net cold rent €700) with an outstanding loan balance of approx. €50,000.

From the bank's perspective, this would be about €250,000 lending value (rather less, as owners tend to overvalue their property by 98%), 60% of which is €150,000 minus €50,000 previous encumbrance. This leaves only €100,000 as the "equity portion" that needs to be financed. A bank will not give you more on the property, unless it is the bank that has already financed it. Then more would be possible. A (just) feasible financing overall for you.

2021-02-03 11:11:33

How do you continue to see the risk that in the event of a collapse of the real estate market, the bank might demand additional collateral?

In this case, zero. If the market crashes, the bank's greatest interest is that you continue to pay diligently rather than auctioning off the properties and taking losses.

2021-02-04 06:19:16

The tax office cannot initially prohibit anyone from freely disposing of their property. Up to now, one also would not have had to invest so much in this apartment and could have kept the money in reserve. The limit is always Section 42 of the Fiscal Code, i.e. abuse of legal form. However, this only applies if there is no other comprehensible reason for this transaction – which is not the case here. Popular in this context is also the so-called spousal swing. One partner sells their share to the other, let's again take the example of 150,000 euros, and takes out a mortgage for it. Common practice, completely legal, and the tax office can do little about it.

no, it cannot, you can mortgage it, however, the fresh money is for the new property. A deduction of the interest on the debt is denied.

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Use existing property as equity?

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