Home Loan v Investment Loan

Convert it asap and ask for it to be back dated from when you moved in.

If you’re living in the property switch your loan to the owner occupied coding – this will reduce your rate significantly.

As per if you move out in the future – the lender will generally not require you to notify them/reassess your debt/make any new application – heck if you call up they will probably not have a clue what to do and just hang up.

When you move out, just make sure you have the appropriate insurance setup for it being an investment property and no longer an principal place of residence.

propertyboy wrote:

Out of interest, what is stopping all new applications applying for a home loan and then renting flats out after their loan has been funded? Do lenders do any checks? Or is this a common trick lending managers are now adopting to reduce interest rates for clients?

There’s nothing stopping them – but if they do get caught they may be penalised. It’s not common at the moment – but no doubt lenders will become more observant with tracking this into the future.

Cheers

Jamie

Well its simple.

If the loan is structured as a owner occupied loan and that’s not your current and legal address they have something to argue in court.

Propertyboy your bringing up a legal issue, better off asking or speaking to a lawyer for exact information and even then it really comes down to the recent court case and what the past has to say in these cases.

Legality is complex and simple, best get real advice as to if this went sour.

I currently have 6 home loans that I live in with 6 different banks. I’m not lining the pockets of those friggin banks, they make enough money from me thank you!

I asked an in-house broker at ANZ about this and they didn’t really have an answer. They basically told me that that ANZ would never follow up with me to check what my intentions are with the property after settlement.

Benny wrote:

If the loan is structured as a owner occupied loan and that’s not your current and legal address they have something to argue in court.

Hmm – that is an interesting thought !! And things in contracts – would have to be quite new wouldn’t they, as it was only APRA swinging its bat that had the Banks charging more for IP loans. All something to do with getting total IP loans below some percentage of all loans (was it 30%?).
So now, if I am a Bank, and you buy a property to live in, then you are charged at Home Loan (lower) rate. Cool – but then you change your mind and make it an IP. I doubt the Bank would worry as your loan is “making up numbers” on the Homeowner side. That means the Bank may be able to make another IP loan to someone else without flopping over that 30% mark perhaps. Your loan is therefore in the “goodness” pile. You are helping the Bank !! :)
I’m also picking they wouldn’t be chasing you. But then, I havent seen any new contracts written since that change earlier this year – are there any clauses in there re this? Ones that could bite?
I dunno…..
Benny

Just a quick one Benny – you’ve got the general right idea why banks aren’t too worried about this. (besides the fact it would be an immense adminstrative burden to keep trying to get the right ownership type up to date for millions upon millions of loans) But the 30% cap is for amount of new interest only loans being written, not investment loans in general. There’s also the 10% year on year growth cap on investment lending which lenders have to abide to.