Difference between buying a property and investing in a property?

What's the difference between buying a property on a home-owner loan and then renting it out vs buying a property on an investment loan and renting it out?
Is it illegal to buy as a home-owner and rent it out or is it to do with tax benefits?

 

Home owner loan will be assessed on your ability to repay the loan on your income alone.
Investor loan will be assessed on your ability to repay the loan on your income + the rental income derived from the tenant you put in there.

Many people start off with their own home that they end of making into an IP and renting out down the track. Home owner loan interest rate and investment loan interest rate used to be the same until recently.

 

So, if I can afford to buy it under a home owner loan, I can do that and avoid stampduty and still legally rent it out? Or would I have to declare it as an investment property?
Also, if i was to live in it and rent one room out, is that legal?

 

How are you avoiding stamp duty? (unless buying new as a FHB)

Who are you making the declaration to:
- the bank?
- the ATO? which you'd probably want to declare to, since you'd be claiming expenses to offset rental income.
- the OSR? if you are getting a FHB grant or SD relief?

It's not illegal to rent a property by the room.

 

Hi, thanks for replying. Yes, i would be a first home buyer but not able to claim fhog as I am looking at an established property.