Use Primary Residence to Purchase 2nd Property?

[fixie]

"The best time to plant a tree is 20 years ago, the next best time is now..." - or something like that.

Wondering if it is possible to use the equity in primary residence to purchase a second property, knowing that in ~5 years(or less) I intend to sell and make the second property the primary.  The reason I ask is, I would like to downsize significantly and, once FIREd, run a small agricultural operation/orchard for a modest living.  It would be great to purchase a property and get the trees and infrastructure in and also to generate a bit of income in the interim...
House "Value": ~$685 - $700k Housing market is and has been kraykray for a number of year(Seattle).
Mortgage: $172k
Possible 2nd property "value": ~375k - $400k
*If bad things happened with either property, I wouln't be homeless, though I recognize there are risk/s.

Will banks/lenders even consider such an idea?

Your other thoughts are most welcome...thx.

-fixie

[calimom]

That's a lot of apples.

Do what you wish though. It's your money. Banks may or may not agree with this.

[MJseast]

I think it depends on the rest of your financial situation. If you can show the income to make both payments, and not a lot of other debt besides the mortgage, I do think lenders would consider this.

From my experience, most lenders will consider a Home Equity Loan (or Line of Credit) for up to 80% of the value of your home that you are borrowing against. So in your case, if your house appraises for $700k, you could possibly get a home equity loan for ~ $422k ($700k - $172k = $528k * 80%). Of course the rates are usually higher than a regular first mortgage.

I often think about a similar situation, but my idea is to buy a condo that could be used in retirement and rent it out for now. I've yet to pull the trigger on that idea though because if something bad happened, I'm not currently in a stable enough financial situation to deal with 2 mortgages. Maybe next year... :)

[fixie]

Hey, thanks for the reply.  I sort of thought along the same lines but didn't want to go to the trouble of going to a lender yet.  Certainly risky, and I am rather conservative with the stash.  I just want to accelerate the plan and am not entirely sure yet how to proceed, other than just selling the primary residence and living in a van hahaha...

Cheers...

-fixie