MHB How Much Equity Is Needed for Buying a Second Property?

[tumeke]

Hello all - I am after a little help and was hoping I could find the answer here!

A property is worth $550,000 and the bank requires 20% equity is kept in the house.
To buy a second property (say $600,000 for arguments sake) the bank requires a 35% deposit. I want to calculate how much I need the first house price to increase by to maintain 20% equity and also gain the 35% deposit required for the new house. I can do this by trial and error, but would love a method by which I could punch in a house price and it told me how much I needed the initial property to be worth to maintain 20% in it while also having 35% of the second property.

Thanks in advance.
Patrick

 

[HOI]

Hello all - I am after a little help and was hoping I could find the answer here!

A property is worth 550,000 dollars and the bank requires 20% equity is kept in the house.
To buy a second property (say 600,000 dollars for arguments sake) the bank requires a 35% deposit. I want to calculate how much I need the first house price to increase by to maintain 20% equity and also gain the 35% deposit required for the new house. I can do this by trial and error, but would love a method by which I could punch in a house price and it told me how much I needed the initial property to be worth to maintain 20% in it while also having 35% of the second property.

Thanks in advance.
Patrick

I have removed the dollar signs because this board interprets them as beginning and ending a math formula.

 

[Wilmer]

A property is worth 550,000 dollars and the bank requires 20% equity is kept in the house.

To buy a second property (say 600,000 dollars for arguments sake) the bank requires a 35% deposit.

I want to calculate how much I need the first house price to increase by to maintain 20% equity and also gain the 35% deposit required for the new house.

I can do this by trial and error, but would love a method by which I could punch in a house price and it told me how much I needed the initial property to be worth to maintain 20% in it while also having 35% of the second property.

That's all quite unclear...

Can you provide a full example...

 

[tumeke]

OK sorry if it was unclear. I should have included an example.
House one cost 550,000 and I have to maintain 20% equity at all times. So 110,000 at current levels, 115,000 if the value rises to 575,000 etc.
I want to buy house two for 600,000 and require a 35% deposit, being 210,000.
If house one rose in value to 796,000 I would maitain 20% equity (159,000) while also having the 35% deposit required for house 2 (210,000).
I'm after a formula where I can put in a value of house two and it tells me the value house one would need to have to maintain 20% equity while providing the 35% deposit.

Thanks again
Patrick

 

[Wilmer]

"House one cost 550,000 and I have to maintain 20% equity at all times.
So 110,000 at current levels, 115,000 if the value rises to 575,000 etc."

What does "20% equity" mean?
Maximum mortgage of 80%?
If house paid, you'd have 100% equity?

"I'm after a formula where I can put in a value of house two and it tells
me the value house one would need to have to maintain 20% equity
while providing the 35% deposit"

You've lost me...again!

 

[HOI]

Here is my interpretation: you need to take 210,000 out of the first house in order to buy the second house. The bank requires that you take no more than 80% out of the first house (leaving 20% equity). So you need the first house to be worth "W" with 0.80W= 210,000. W= 210,000/0.80= 262500. The first house is currently worth 550,000, that is already enough. It does not need to increase in value. 80% of 550,000 is $440,000l, more than 210,000.