Do people buy houses with their LOC?

[turboturn 16]

Hey guys, I just wanted to know if anyone else out there uses their LOC to invest in stuff like property/housing? Is it legal? Any advice would be helpful!

I'm only asking if it's legal because I know the LOC is allotted for our medical education and to pay for things like tuition and materials. But I've also seen people spend their LOC on trips and cars, so I'm wondering if people also go for things like houses.

[ChemPetE 61]

Be careful - med school is not guaranteed to be in the same city as residency, and the market is of questionable volatility depending on who you ask. But it is possible, sorta I think

[offmychestplease 178]

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[UwoToUo 121]

No lmao it's not illegal. The only thing I know for sure when it is breaking the contract (not illegal) is if you are using it on behalf of someone else (making purchases for another person). I'm guessing you are not too worried about paying for your studies/have other sources of money like parents/savings. Only invest what you are fully capable of paying back on top of your school expenses. Btw just bc of your phrasing I feel the need to clarify - med students need cars in clinical years when they're going to multiple hospitals at super early or late hours and busses aren't necessarily running. It's necessary. I guess you can justify a house the same way, you need to live in the city and can rent it out/sell it later and get that money back. If you're buying a house are you doing it with your parents? Youd probably need a cosign. Talk it through with them.

[turboturn 16]

10 minutes ago, ChemPetE said:

Be careful - med school is not guaranteed to be in the same city as residency, and the market is of questionable volatility depending on who you ask. But it is possible, sorta I think

True, but I'm also planning on selling after 4 years (unless the rental market is popping, then I might just rent it out during residency). And the market in my area is pretty solid, it's up and coming and housing prices are only going up at the moment. Of course, I can't tell what the future holds, and it's still a risk.

 

7 minutes ago, UwoToUo said:

No lmao it's not illegal. The only thing I know for sure when it is breaking the contract (not illegal) is if you are using it on behalf of someone else (making purchases for another person). I'm guessing you are not too worried about paying for your studies/have other sources of money like parents/savings. Only invest what you are fully capable of paying back on top of your school expenses. Btw just bc of your phrasing I feel the need to clarify - med students need cars in clinical years when they're going to multiple hospitals at super early or late hours and busses aren't necessarily running. It's necessary. I guess you can justify a house the same way, you need to live in the city and can rent it out/sell it later and get that money back. If you're buying a house are you doing it with your parents? Youd probably need a cosign. Talk it through with them.

Right, yeah I've got the finances planned out (tons of savings and govt student loans/bursaries should support me for tuition + living for the next 4 years). Plus with the prices I'm looking at, I should also have a buffer of $100k left from my LOC. My parents are willing to cosign if need be. But if I were to just buy it with my LOC, with no mortgage, then I don't think that's necessary?

 And yeah sorry, of course, a car is necessary. I should've clarified - I meant luxury vehicles near the upper limit of their LOC (as @offmychestplease mentioned).

[ballsortahard 34]

Just out of curiosity where are you living where you can but a house for 100k?

[bruh 496]

55 minutes ago, offmychestplease said:

you can use your LOC for anything. I know someone that bought a $150,000 new Porsche in cash with it. 

No way LOL. That’s actually wild.

[VivaColombia 31]

24 minutes ago, ballsortahard said:

Just out of curiosity where are you living where you can but a house for 100k?

LOCs should be around 350K, can get you a decent house or a condo. You can use that LOC for a lot of things, vacationing, cars, houses, etc. Seen a lot of people blow it on things they don't need but hey when you have a 350K unsecured LOC, might as well live it up lol

 

[offmychestplease 178]

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[ArchEnemy 131]

A few of my classmates bought homes in downtown Toronto with their LOC and the value of their homes doubled by the time graduated medical school.

[turboturn 16]

4 hours ago, ballsortahard said:

Just out of curiosity where are you living where you can but a house for 100k?

I'm finding some things for $200-250k, with a 350k LOC, I would have 100k leftover.

2 hours ago, ArchEnemy said:

A few of my classmates bought homes in downtown Toronto with their LOC and the value of their homes doubled by the time graduated medical school.

yeah lol, thats the plan. I don't think mine would double, but there's definitely a significant upwards trend. it'll be nice to make at least some cash right after medical school

[UwoToUo 121]

6 hours ago, ballsortahard said:

Just out of curiosity where are you living where you can but a house for 100k?

You can mortgage w <<100k easy. I forget how much but maybe 20% for downpayment? ** EDIT - Downpayment can be anything, but new homeowners can do 5% apparently but it's not recommended. Plus the bank has to approve of it and would not be possible if you don't have any annual income so has to be under mom/dads name and then you violate the terms of your LOC, but look into what mortgages are possible for students?**  But then @turboturn wouldn't you have to get a very long mortgage and that would get consolidated to any new house you move to for residency/staff, etc? Youd be paying off that initial one for like 10(+) years. Idk v much but when we were looking into moving some of those things were dissuading. Lmk bc I'm also curious, PM me if thats better for you.

5 hours ago, bruh said:

No way LOL. That’s actually wild.

Are you me? I literally said that exact line when I read that just now. If youre rolling up in a nicer car than some of ur attendings during residency theyre going to clown tf outta you lol

[medicallyricalmiracle 151]

Unless you have a basically bulletproof plan for paying for/maintaining the property when/if you leave that city, it sounds like a lot of stress to put on yourself when you should be 100% focused on your medical education and well-being.

[James Nystead 251]

Started a similar thread regarding using LOC for down payment in residency

[W0lfgang 102]

I bought a house at the beginning of residency with my LOC for the 20% downpayment. Outside GTA. Price still doubled by fellowship. Go for it.

[premed72 80]

So let's say you finish med school and now a resident with somewhat of an income. Whatever you have remaining on your LOC can be used for a downpayment for property? Its interesting this topic just started, I've been wondering how I'd be able to get into the market as a young trainee after med school... 

[rmorelan 2,561]

10 hours ago, premed72 said:

So let's say you finish med school and now a resident with somewhat of an income. Whatever you have remaining on your LOC can be used for a downpayment for property? Its interesting this topic just started, I've been wondering how I'd be able to get into the market as a young trainee after med school... 

the issue is you officially cannot have 100% loan on your house - you need say 20% down to avoid the interest penalty in actual assets. 

it is hard to ignore the that fact you cannot use the LOC to withdraw money mind you and have the cash there - appearances are important. For me they did ask me to prove I had the actual money for it. 

Also should mention people think you don't need to LOC once you are a resident - that is probably not the case - I mean many I suppose technically most still have more time to go, say 5 -6 years or even more to go. Your residency salary if you are lucky and not in a super expensive city can cover things. However for many that is actually tough, particularly when the tax credits run out. Once again there are all these expenses that keep popping up - like exam fees, travel costs for fellowship interviews, and well "life". 

buying a house also will very likely cost more than renting in terms of cash flow. Many landlords don't make money at all of the rent and may even lose money - the pay off is in the increased equity in the property. 

still if you want to there usually is a way!

Edited August 14, 2020 by rmorelan

[offmychestplease 178]

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