Do i need to inform bank my house is being rented out?

Hi Guys,

First time on here and was hoping i could get some advice.
I've recently purchased my first house a few months ago and used my first home owners grant and got a two year fixed loan with NAB.

I plan on renting it out in a few months time after having live in it for 6-8 months and move back with my parents as i want to travel, shop and purchase a second property in a few years time. Do i need to inform NAB that my house will be rented out?

 

You will need to read your loan agreement with the bank. I recently read a CBA agreement and there was a contractual requirement to notify them if the property was to be rented.

 

What are the usual repercussions if you did not tell the bank and they found out about it later? Does the bank check?

 

@hanskyut - Read the mortgage document to find out. Is it a breach of an essential term? Can the breach be remedied?

 

We have heard recently of certain lenders who are doing searches online to find leased properties that are supposed to be owner occupied. Then subsequently sending out letters notifying customers that their loan is being switched to an investment loan with an 'adjusted' rate. From memory, NAB was one of these lenders. So be aware of this also in addition to your contractual obligation as mentioned above.

 

Breach of contract. You will need to read your agreement

 

Check time frames is you claimed FHG or homeowner stamp duty. Both have set times you must reside after purchase.

You must also inform your insurance company.
Marg

 

That's the first thing I thought of. Most FHOG's require you to live there for 12 months first?

 

You do need to live there for 12 months.

The consequence of the bank finding out the property is an investment is they'll switch to an investment loan with higher rates.

If the Office of State Revenue discovers you've moved out within 12 months, you'll have to pay back the grant and they may issue a fine. If you're upfront with them you'll still need to pay back the benefits, but you're likely to be eligible for it all again later.

 

Perth is only 6 months for FHOG.

Residency Requirements

 

Thanks guys.
We only need to live in the property for at least six months here in Perth.

My insurance policy, I'm paying monthly so to switch this to landlord insurance shouldn't be a problem.

I read through the morgage papers and didn't see anything about informing the bank that I'm no longer residing in the property. I did ask my morgage broker and she said to just keep it to myself and not tell the bank?

 

As other have mentioned if they find out the will change your rate to the investor rates.

DEF NOT LEGAL ADVICE and not telling you how to get away with being deceitful with your contractual obligations but if there was a regular payment coming into your bank account that wasn't your wage it would likely raise a flag for them to investigate further. To avoid this maybe create another bank account with another bank for the person to transfer the rent money.

However getting it from this account into your other account might be the pain then unless you make anytime you get 5k you transfer it from your other account to there.

Doing this would likely mean that you didn't just forget to tell the bank of the change circumstances so they might have a higher penalty rather than just issuing a notice of changing rates - check your contract.

 

Doesn't everyone have multiple places of residence?

 

I have heard of people receiving letters from the bank that there PPOR is now an IP and the rate goes up as a result.

Hard to say for sure what will happen if you dont inform the bank and once they are onto it will likely just swap to an investment loan with a higher rate.

 

Thanks guys. I'll do the right thing and inform the bank and most likely refinance after the two year fixed period if I can find a better rate elsewhere