Investment Loan or Owner Occupier?

I currently have an owner occupier loan for a studio apartment in Melbourne CBD.
Have a good rate of under 4 percent and paying interest only payments.

The bank has approved me for an investment loan for around 400k at 4.8 percent.
I am planning to buy a 1 bed apartment in cbd and move into it, however unsure if should go for the investment loan or owner occupier?
As unsure if could borrow atleast 350k with owner occupier loan?
does it affect my borrowing acapcity? if yes, by how much?
will my current loan change to investment loan?

please advise

 

It shouldn't affect servicing as you'll be getting rent for one or the other, assuming you're living in the first one now.

If you're moving in why would you get an investment loan?

 

Be honest on your mortgage applications is my only advice

 

Thanks Jess.
i applied for an investment loan as was advised by the lending manager that the borrowing capacity increases.
also, i am using some equity off the current studio.

the apartment i am planning to buy is around 380k and have around 50k as deposit.
what are the suitable options?

 

Thanks. I agree. I was initially skeptical about the move in plan and also didnt want to move in for atleast 6 months. Also, wondering how it changes the borrowing capacity.

 

Thanks Jess.
i applied for an investment loan as was advised by the lending manager that the borrowing capacity increases.
also, i am using some equity off the current studio.

the apartment i am planning to buy is around 380k and have around 50k as deposit.
what are the suitable options?

 

it doesn't increase at all - it actually makes your lender sound a bit dodgy.

Get a second opinion - it's hard to give specific advice over a forum but there's likely other ways to achieve what you're hoping to. It's also likely the lending manager is cross securing your loans so please check that too.

 

@katsu
Like many of us I'm a bit like you, bugger all idea about all this kind of stuff, I/we don't work in the industry, which seems to change daily, worried if those in the know, work in it, profit from it, are actually doing the right thing by me, or them.

In my opinion, going to a/the bank gives you an insight to see where you stand with "them only", no idea how efficient they are, after all he/she may just be a half hearted take it or leave it wage earner for the bank, offer you their deal even though they know there's better options elsewhere for you.

As @Jess Peletier said "Get a second opinion" or even third, compare the information provided, whilst sometimes hard to get our heads around it all I believe it ultimately comes down to who explains it better, who you feel most comfortable dealing with.

Like others on here, Jess specialises in investment property loans/structure, best way to set them up etc, as a broker she has options available with many lenders that we as non-brokers don't have access to.
It can all be done via phone, email, skype, whatever, Jess's contact details are in her forum post signature, costs nothing but a bit of time to see what she comes up with for you.

 

Might be worth getting a second opinion, a different lender could help increase your borrowing power without having to lie.

Also consider the tax implications of having your investment property at a lower interest rate. Remembering that, Interest Rate x [1 - Marginal Tax Rate Tax Rate] = After-tax interest rate.

 

@katsu it's already been said but there's more options out there than just the single lender you've already dealt with. Lenders do have different policies which can lead to variations in how much they'll lend in to various peoples and scenarios. There's plenty of brokers here that may be able to find good alternatives. There are lenders with cheaper rates and better borrowing calculators out there than the big 4.

I also think it's a serious mistake to purchase a studio apartment in the Melbourne CBD.

 

Thanks All,
I shall seek other options and see what is suitable.

@Peter_Tersteeg - Thanks for your opinion about the Studio.
Well!, Since there has been CG on it and quite strong even with rental return, I feel I haven't gone wrong.
Also, Suburban developments don't suit everyone's needs.
From the past 5 years, I have saved around 30k by just not having a car as my work has always been in the CBD.
In addition, i prefer an active lifestyle and a 5 min walk from work back home helps maintain it.

There are lot more learned and experienced than me, however, I guess if someone like me is on low wages, it is rather better to buy small, avoid car expenses, rather than being unable to afford to buy anything.

 

This part has me confused, you're applying for an investment loan but you're planning to live in it. I didn't realize there was a choice in this.

 

The loan can really on be what the place will be on settlement day, if it will be home, then is a home loan, if it will be rented and rent is used to service, it will be an investment loan.