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Using equity from primary home to buy a second home in China with cash

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Using equity from primary home to buy a second home in China with cash

My work require me to travel back and forth between Beijing and the Bay Area.  I spend about 2 months in the bay area, followed by one month in Beijing, and then repeat.  I currently own a primary home in the bay area and also have an apartment in Beijing for about $2000 a month in rent.  I would like to stop renting in Beijing and buy a second home there instead.

My original plan is to do a cash-out refinance with a bank in the US on my primary home to get some cash.  I was going to max-out my DTI in the cash-out refinance while keepting the LTV of the primary home to be under 50% (I have a lot of equity on my primary home).  The rent in Beijing was going to be part of this DTI.  I was then going to use the cash-out as down payment for a purchase loan on the second home in Beijing through a Chinese bank.  I was going to limit the size of the purchase loan such that the monthly payment on the second home would be the same as my previous rent ($2000 per month), so I would keep the same DTI profile.  I definitely have no intent to hide any debt to either the bank in the US or the bank in China.


I just found out today, however, that this plan is not going to work because Chinese banks does not allow the down payment on a purchase loan to be from the equity of another home, even if the LTV is low.  I am now trying to find an alternative plan.  Is it possible to pay for the second home entirely using the equity in my primary home through a cash-out mortgage?  How can I get the bank doing the cash-out mortgage to not count my current rent in Beijing into the DTI since it will be replaced by the second home?


Valued Contributor

Re: Using equity from primary home to buy a second home in China with cash

Do your cash out refi and stick the money in the bank for 4 months (made that time frame up) in order to season the funds. Then buy your house!
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