Hi Guys,
Looking at buying my first place.
Just wanted to clarify the issues with getting a Owner Occupier loan and paying it for a month then deciding to turn the property to a rental. But still keeping the Owner Occupier loan rates.
Owner Occupier Vs Investment Home Loan
xmod on 29/01/2017 - 09:27
Last edited 29/01/2017 - 09:27
Last edited 29/01/2017 - 09:27
Comments
As long as the bank gets their money each fortnight/month they don't care.
If you don't have the financial capacity for owner occupier and rental income is going to be included then you may not have luck with an owner occupier loan
It doesn't sound like financial capacity is an issue. I imagine OP has already planned on when they're turning their PPOR into an IP.
As long as the bank gets their money each fortnight/month they don't care.
Unless something goes wrong?
I'm guessing rate of repayment is better on an owner occupier.
I think there are some tax advantages too though?
The main thing for tax is the offset account. You can use it to reduce interest, but it does not count as a repayment (as it would with a redraw facility). Therefore if you need to take money back, you can still claim interest in the full outstanding amount (vs redraw).
So as long as an OO loan has 100% offset, there is no difference from a tax point of view.
I don't think the property meets the criteria for PPOR if it is only 'lived' in for 1 month so the 6yr CGT exemption probably won't apply. That would be the other tax implication
I have done this without issue (although not after just a month).
I did not notify the lender,or anything. If you are paying the mortgage, how will they know?