Options for financing the remaining balance after taking over an assumable mortgage

[Dave Craig]

I have a good opportunity with an off-market deal that is currently exclusive to me. The purchase price is right and the seller has an assumable mortgage in place at a very good rate. The problem is that the mortgage is only about 42% of the purchase price. I have the remaining balance in cash but that ties up a significant amount of capital and overall isn't really justified in the ROE. Are there options for assuming the existing mortgage and financing the remaining balance with another mortgage? Putting up 58% turns a good price on this into a bad deal. It would almost be better just to finance the whole thing on my own without assuming the existing mortgage. I'm hoping there are options that allow me to leverage the good rate on the assumable amount and not dedicate so much capital to the deal.

[Jay Hurst]

Quote from @Dave Craig:

I have a good opportunity with an off-market deal that is currently exclusive to me. The purchase price is right and the seller has an assumable mortgage in place at a very good rate. The problem is that the mortgage is only about 42% of the purchase price. I have the remaining balance in cash but that ties up a significant amount of capital and overall isn't really justified in the ROE. Are there options for assuming the existing mortgage and financing the remaining balance with another mortgage? Putting up 58% turns a good price on this into a bad deal. It would almost be better just to finance the whole thing on my own without assuming the existing mortgage. I'm hoping there are options that allow me to leverage the good rate on the assumable amount and not dedicate so much capital to the deal.

 You can get a second mortgage to go with the assumable loan. The current loan would have to evaluate your debt to income with the additional debt etc. You would still be looking at having to fund say 30% of the deal and the second would of course have a much higher mortgage then the first. So, you would still have to evaluate the "blended rate" of both mortgages to make sure the deal still made sense.