Consequences of financing for a PPOR later swapped to IP

Hi, I'm just curious - my broker that I am talking to about my first (hypothetical) property purchase has asked me whether I'll be living in it as a PPOR or renting it out as an IP. They inform me that I can borrow more if I use it as a PPOR.

Truth be told I am not looking to move into a new place any time soon. But... I am wondering what the consequences would be of borrowing for a PPOR, "moving in" to it for a week, then moving out, and renting it out as an IP? What happens in that scenario? Does the bank suddenly own the house? Can I get sued? Etc...

 

If you are asking ‘does the bank suddenly own the house’, you dont have the knowledge framework to understand the answers. All you will do is ask ‘but what if’ questions that dont make sense, get confused and give up.

Suggest you read this forum fully and maybe a few australian property books to get some basics first to know the right questions to ask and understand the answers.

if you are serious about doing this, work on your income or find a source of finance.

 

It sounds like you want to get the owner occupier interest rate - is that correct?

 

Correct.

 

There is no consequences in what you want to do, however on your loan doc package I beleive requires you to notify the bank when anything changes.

 

But I wonder how many people actually do?

 

One consequence of it not being owner occupied is the rate could change (UP) if the lender has a different loan rate for investor loans. Owner occupier loans are usually the cheaper rates and some lenders are same.

Also consider stamp duty and land tax issues and insurances. This could even see a duty concession retrospectively cancelled and first home buyer concessions are well targetted by the state govt. The First Home Loan Deposit scheme has a rule concerns 80%+ LVR loans being owner occupied. If you move out you may need to take out LMI if the place is rented. Lenders have got better at identification of the issue. eg You seek to change the postal address. Your banking app and card addresses and more. Around 5+ years back lenders got pinged by APRA from not having a clue about who was investor and who was a owner occupier.