Home Equity Loan on a Co-op

the board will have to approve it and you know they won't.

Btw, how about this case: the co-op policy requires only 20% down but due to high sublet percentage in the building, banks usually require 25%. Can a home equity loan in that case be taken post-closing, to get 5% back, say from a different lender?

No. Never.

No responsible board will ever allow a home equity loan. The goal is to have no financing ultimately. Refinancing is only allowed to lower rates, not increase the size of the loan. Period.

If "the goal is to have no financing ultimately" is really true, then why so many co-ops have underlying interest-only mortgages?

Not sure about an actual home equity loan, but some coops allow HELOCs. I know mine does. That said, I doubt they would approve one in the situation you described.

My comment related to individual shareholders. A prudent board will never allow a shareholder to increase their financing from day one. To the contrary, we expect them to pay down or pay off any loans. Whatever minimum financing a co-op says they accept, the rule if thumb is to come in with less financing than the stated minimum. So if a building says they allow 75%... You should not ask for much more than 66% .

Flarf, the reason for underlying interest-only mortgages on the building is to minimize current maintenance payments. And it works.

We have a co-op with a self liquidating mortgage (known elsewhere as simply a mortgage). Our building's mortgage will be completely paid off in a few years.

The board studied if there was any way to convert to interest-only to lower maintenance payments, but the prepayment penality is so high it is not cost effective. But doing so would have lowered maintenance for residents.

Target, was any of that supposed to answer my question?

Leaving the board out of it (not all coop boards are so conservative), would a bank approve this kind of thing? Especially if the money were to be used for property improvements that could reasonably be recouped at sale.

Target is just wrong. I live in coop and took out a home equity loan without a hitch. I started at 20% and ended around 28% of value. It all depends on board, and the deal you propose.