Home Loan Query Investor to OO

Jambaroo on 05/12/2019 - 18:36

Hello people

i would like your thoughts on the below. Any info is appreciated

we own a home and thought we will buy another home as an investment. after a gruesome search of 4 months we found a place and bought it as an investment and settling in a week. we took the loan as an investor and serviceability was more $$ than if we were to take the loan as owner occupied . all good until now and we are planning to advsertise to put it on rent. the rate of interest on investor loan is higher too.

However my partner fell in love with it and now thinking of moving into it. i am worried that this might cause issues with the bank as we have taken the loan for investment and now we are planning to move into it. i tried to convince my partner that we will rent it out for 6 months and then move but was unsuccessful.

so my question is if i move into the house and dont claim any negative gearing on it, will it be ok or will the bank find out and cancel our loan if we move.
has anyone done that? what are the consequences?

Any lenders if you k ow what the big banks policies advise please

Financial Home Loan

Comments

  • dcep on 05/12/2019 - 18:44
    +4

    the bank won't care

    • Jambaroo on 05/12/2019 - 18:52

      so i don’t need to inform them? i plan to let them know after 6 months though

      • dcep on 05/12/2019 - 22:51
        +2

        no need

        usually it's the other way round

        where ppl bought ppor on oo loan, then decided to turn it into ip, but still paying the same loan on oo rates (which is lower than ip rates)

        bank doesn't care, as once loan is approved, it stays until you decided to refinance

        • Jambaroo on 06/12/2019 - 08:40

          Thank you i’m relieved as i was worried the bank may cancel if they know

  • garetz on 05/12/2019 - 19:03
    +4

    They will not cancel your loan, they will be happy you are paying extra interest even though its now owner/occupier.

  • Meho2026 on 05/12/2019 - 19:18
    +2

    You need to consider other things, well maybe your partner does.
    Its always better to have the lowest loan on your PPR and the biggest on your investment property to use tax deductions effectively.
    The way you structured the loans could affect that.
    If you have set your loans up in a way that disadvantages you like that then you might be better telling the bank so you get a lower interest rate on the new PPR and the investor rate on your existing property.
    Remember you can only have one PPR so the minute you move into the new place and rent out the old one. The old one will start becoming subject to CGT.
    Next time dont buy an investment property with any emotion, it should be purely a business transaction.

    • Jambaroo on 05/12/2019 - 19:38

      thank you. it was not emotional. but what you said make sense. we were looking to buy a place with a view of moving into it in a year or two. then we found this house which is beautiful and new and close to station . i would definitely get a good ROI if i rented

  • dasher86 on 05/12/2019 - 20:15

    Did the bank consider the additional rental income as means to service the loan?
    Is the loan in your capacity without the additional income?
    If so bank probably won't care.

    • Jambaroo on 06/12/2019 - 08:44
      +1

      Bank did consider the rental income as a means to service the loan. the funny thing is on my current property, though it’s less expensive i get the same rental as the new one and i’m sure if i put it in market for rental the old property will be occupied much sooner than the new one. so i can pay my mortgage without any issues and we have additional buffer to cover us for worst case scenarios. thanks dasher86 definitely a sound advice

  • spal on 06/12/2019 - 05:39
    +1

    If it is one week from settlement I would suggest don’t notify the bank now. They will need to reassess the loan, as now you would not earn rental income from the investment property, but would earn rent from your existing property. This is too close to the settlement to be mucking around. Move in first and then make changes. Depending on the bank, you may need to either change the loans on the existing property to investment rates and get home loan rates for the new property. Or if you are with Westpac, you may get away with just changing the new loan to a home loan rates. They usually do not reassess the whole loan portfolio.
    You are always better of paying the least amount of interest possible on any loan. If you can reduce your interest rate on the investment property too, that is going to be better. Advice that you should pay higher rate of interest on the investment loan to be able to get higher tax deduction, is ill informed to say the least.

    • Jambaroo on 06/12/2019 - 08:46

      thank you i won’t play around with informing the bank now. even if i do it in good intention it may backfire.

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