Hi Guys,
I just need your opinion on converting owner occupied property to investment property. I have a property in sydney that I want to convert to investment property as I am moving to canberra for couple of years and so just wants to convert my existing one to investment property.
Could you please advise me the steps to do this? like Do I need to involve real estate agent or inform bank and all that ….
Thanks
Jay
I need to convert my loan to investment loan and need to make it interest only. For that I need to let bank know about that????
IO loan still available ???
Why convert to interest only? Much higher interest rates IO vs P and I. Plus then if you tell them it’s an investment IO only the interest is higher again…
Get a valuation done of the property for any future CGT purposes.
Not required, 6 year rule exempts it from CGT as long as no other PPR is purchased.
Still worthwhile to get a valuation in case OP sells after 6 years. Cgt should be based on the day it becomes an IP not from the day they purchased the property.
apartment or house?
need more info about the property
This is a apartment.
Where about in sydnev
Speak to a real estate agent. They will organise everything and tell you the steps.
Speak to your bank manager and they will convert your home loan to a investment home loan,the rate may be higher.
The only thing I don't know is that because you have an apartment, you have to notify someone in the strata? No idea about that.
plus speak to an accountant to determine the best options tax-wise.
Hey mate, mortgage banker here. For the bank that I work for , one of big 4, to convert OO property to INV, it’s really easy all you need to fill out is notification of Loan purpose change form. Takes about two mins to complete then you scan and send back to inbox. As to change from P&I to IOL, you’ll need to go through the application process again. Credit check and income verification and all. This is to make sure you can service the loan after the IOL period expires as you’ll have less time to pay back the principal so your repayments will go up. Because of this the bank has to see if you can afford it at the end of that’s IOL period.
“Do I need to involve real estate agent or inform bank and all that …."
Really depends on what you are trying to do. Do you need to inform the bank so that they can change your OO loan to Investment and charge a higher interest rate? .. NO. Is that considered as non disclosure to the bank? Yes. Is it Illegal? No.
Can you claim interest on your tax return on a loan that was originally for OO purpose … YES (if you get singled out for audit, simply prove it's an investment with such things as a tenancy agreement - this is where a managing agent comes in handy, also the fact that you are living in another residential address).
Having said that, assuming you have considered your financial situation and have reasons to change your loan to an Interest Only Loan, then you need to go through the application & assessment process. So if you are happy with your current lender, contact them and they will arrange for it, if you need IO, then its a new loan application. However I would strongly suggest for you to go to a broker, so you can also check out what other offers are out there? You would definitely get a better IO rate through a good broker.
do you have offset facility?
unless you want to rent it out privately then yes you will need a RE agent.
Will you be buying a house in canberra or renting? If renting, then no need to advise the bank that you hold the loan with, unless you want to restructure in some way