Getting Equity Out of my house for travelling?

Question

I bought me house last December and now I want to travel (working holliday) for 1-2 years… Is it possible to get equity out of my house for this purpose.

Here is the info I have to work with.

House Cost $270,000
Still Owe $260,000
Pay approx $1800.00 per month in repayments.

Could probably rent for $300 per week (on gold coast)

My house is on the Gold Coast so I think the prices have risen a bit, ($20K-$30K)

I would like to borrow enough equity to cover the shortfall between the rent and mortgage repayments and have about $10K for travelling..

Do you think this is possible or should I just sell???

Answer 1

I agree with Mary with the fact that leaving the house empty is not an option, but it sounds like you want to rent, right?

You're on the Gold Coast so you are just north of me. Your rent figure seems to be a bit conservative, even by Gold Coast prices, which are 5 to 10% lower than ours.

Homes in your price range here, in turn-key rentable condition and in decent neighborhoods East of I-95 go for $1800 - $2500/month here. Sounds like you feel your house will bring less than that. Is there a reason? Does the house need work? Less than desirable location? Is it a 2/1? A 2/2? Just curious why your rent would be so low.

Getting equity out of your home is a possibility, yes,but you'll only know it's value if you have it appraised by someone who meets USPAP standards in Florida. I would say that's your first step.

If you can realize $10K after it's appraised, then you can begin making plans get the equity line, and then clean out the house and place it on the rental market.

Two suggestions:
1) Give the option to rent it unfurnished. If you do this, you need to figure in storage costs. Many people will not rent furnished, unless the place is very nicely furnished and professionally decorated.

2) Do a credit check on anyone you rent to and see if you can get them to sign a 2 year lease ( so your place is occupied the entire time you're gone.) Consider hiring a property manager who will take care of leasing, and can find someone to maintain your property (yard, etc...)

If you don't, and you come home to a trashed property, then you're going to have an even MORE expensive working sabatical and you'll have to take out another equity line to pay for the damage.

Best of luck, and I hope all works in your favor.

Answer 2

If the figures you gave us are true then there is no way you can take enough equity out to do what you want. Just last December you paid $270,000 and still owe $260,000. Even if the prices have appreciated $20k-$30k since you bought, your LTV (loan to value) would still be really high.

Assume for a second that it went up $30k (the most optimistic assumption), then the house is worth $300k. You owe $260k which is 86.6% of the value. Most places won't lend above 90% of the value. You will pay more (through interest) if you want to increase the LTV to 100% (or more -- don't do that).

I think you should sell. Actually, you never should have bought if you thought this was going to be a possibility.

Good luck!

ps - my answer didn't even take into account how crazy it is that you would put an asset like your home at risk for something where you will spend the actual money and no longer have it invested. Financially it is a dreadful decision.

Answer 3

It relies upon. initially, how previous are you? if you're nevertheless youthful and robust, purchase a house that you're prepared to service the money owed with some funds to spare. if you have become previous and feeble, bypass travelling even as you nevertheless can. Secondly, evaluate how lengthy do you need to service the money owed in case you purchase a house? and then, you need to get excitement from residing contained in the homestead freed from encumbrances. A roof over one's head, with no need to rigidity about funds owed after one retires is significant to many. Thirdly and larger importantly, is your pastime/destiny income certain and/or sturdy? dropping your pastime/income ought to impact your potential to service the money owed. maximum significant of all, at which degree is the genuine property cycle now? In different words, is cost of the homestead predicted to bypass up or bypass down? If the former is probable, purchase a house; and bypass travelling if the latter is probable.

Answer 4

Sell, b/c you also are not figuring in the costs of maintaining the home while you are away.

You can't just shut off the electric, etc...or you will come back to one stinky, smelly, molded house.

Who will do the yard? Who will clean the dust up?

Houses, b/c of lack of air flow, don't do well when they are not occupied...a house actually starts to physically deteriorate after being physically abandoned after only 6 months.