Banks and lenders view owner-occupied homes and investment properties differently, and if you wish to rent out your owner-occupied property, then you must let your finance provider know, or you could face consequences.
If you decide to turn your owner-occupied home into a rental property, and you are paying off a mortgage, then it is important to notify your lender of this decision. This is because home loans for owner-occupiers are generally different to home loans for investors. If your lender finds out you have been untruthful about the purpose of your loan, there could be penalties, and you could potentially even end up losing your home.
How are owner occupier and investment home loans different?
Generally speaking, home loans for investors tend to be more expensive than those for owner-occupiers, because lenders tend to view investment home loans as slightly riskier. For example, if you are unable to find a tenant for your property and it sits vacant for a period of time, or if your tenant does damage to the property, you may find it more difficult to pay your mortgage. From a lender’s point of view, this makes you slightly riskier as a borrower.
For this reason, if you apply for an investment home loan, you may find that the interest rate attached is slightly higher, or the maximum loan-to-value ratio (LVR) is slightly lower, meaning you might need a larger deposit. If you have a home loan as an owner-occupier and you decide to turn your property into an investment, you may then need to refinance, in which case the terms of your new mortgage could change, and your lender could charge you a higher interest rate.
Given the differences between home loans for owner-occupied properties and investment properties, it is therefore important to let your lender know the purpose that your property is being used for, and if that purpose changes.
Can you rent out an owner-occupied home in Australia?
If your home is owner-occupied and you are paying off a mortgage, then it is very likely you will need to refinance to an investor home loan if you want to start renting out your whole home. This is because banks and lenders view owner-occupiers and investors differently. If you do not wish to rent out your whole property, you can also rent out a room in your house while you remain living there, in which case it’s possible you may be able to stay on an owner-occupier …….
Source: https://www.canstar.com.au/home-loans/renting-owner-occupied-loan/
