IP KDR PPOR

Hi,

I have an IP purchased in 2013. My plan is to knock down and rebuild, which will start in a few weeks. Currently renting and I intend to move into the new home once finished. Expected finish date Dec 2019, most likely early 2020.

The loan on the property is currently investment loan I/O.

What date do I tell my lender to convert I/O to OO P&I?

I called revenue re my land tax and I've been told that I start PPOR date when demolition is finished as i intend to live in it. I wasn't sure if this is the same case for loan products...or do i convert when i move in?

Also, for best outcome, the earlier I convert the better (lower IR)?

Thanks!

 

Before we get to that, when did you tell your lender that you are going to make the security that they have loaned against, less valuable by removing the building on the land?

 

@Peter P, just out of interest, how are you funding the rebuild?

Using cash, another loan, ...?

 

@Propertunity @kierank I informed the lender 12 months ago, then again 3 months ago that I will fund the entire process using my savings and will not require any additional loans.

 

in that case I would inform them immediately that you are moving in.

 

Thank you @Terry_w

Also would like to note a few things I learned during the process.

- Contacted revenue re land tax. They say if you intend to KDR and live there, then the PPOR will start on the day you demolish the IP, need to inform them with documents. Great news for me as land value in NSW will now fall below threshold.
- Loan IR from IO to P&I reduces, net increase about 20% in my monthly repayments

 

OSR do a check with council too. I know someone who didnt seek a DA and OSR knocked them back. Council then pinged them for non-compliant development commencement.