HELOC for Investment Property

A HELOC for investment property is a Home Equity Line of Credit, which can be used to purchase an investment property. It is a way to release equity from your home or, if you prefer, a way to borrow money against the equity in it. It is also another form of mortgage. So, something of a complicated beast.

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The point of a HELOC home equity loan for investment property is that the equity in your house is just sitting there, doing not very much. Why not put it to work again, doing something else? If you can use that capital you have there to buy another place (the investment property) then you are earning the returns from two properties instead of just one. Sounds like a pretty good idea, really.

Selling your house to buy the investment doesn’t sound like the point at all. You’d still only have one property. Refinancing or re-mortgaging can be done but that gives you the equity in a single check which may not be how you want to do it. A HELOC for investment property establishes a credit line for you to use, rather than giving you all the money at once. So you can establish what you can afford first, then go house-hunting. Or perhaps you will be receiving income from the investment which you can use to reduce the line of credit, over and above the agreed monthly payments you will be making. What a HELOC really gives you is flexibility which is something that can often be put to good use in investing.