I am planning on refinancing to pull out some equity but I want to know is it illegal to tell the bank that you are living or will be living in a property to access the cheaper rate then say its an ip at the higher rate? My lease is up on my ip soon and I'm not sure if they will be staying, I hope they do. My property manager just told me the market is terrible at the moment in Byford. Sorry if this has been asked already.
Technically it could be a breach of the crimes act - obtaining a financial advantage by deception. It may also be a breach of contract with the bank.
I'd rather tell them I'm not living in it. The additional quarter percent is nothing compared to being able to include rental income in the calculations
The tradeoff will depend on individual goals - some people don't need as much money as banks are willing to throw at them. Also, it may not necessarily be true as a general statement, in this scenario there is an offsetting expense too. It would depend on how their living arrangements are changing. But in most cases it'd be true given that debt is loaded up as a theoretical expense while rental costs are taken at the actual rental expense. E.g. OP may currently be renting a penthouse on the harbour and moving into the PPOR may mean not including that rental expense too. In terms of illegality - i'm not lawyer, but IMO the rate saving is not worth taking the risk of breaching the crimes act as Terry mentioned. Cheers, Redom
Both banks I have dealt with have said to get an OO loan.. Then they do not mind what you actually decide to do with it.. I thought it was bizarre..
The thing is, the banks have been directed to not grow their IP loan books by more than 10%. But no such directive has been made for OO loans. Therefore its in the bank's interest (under APRA's watch anyway) to carefully make investor loans as they are more "scarce" to hand out. But OO loans... no issues. They can grow the OO loan book as much as they like. So even if they get 27 extra basis points with an IP loan, they cannot lend that money to someone else so it would restrict their overall lending book. So that's why you may have received that advice. If you can call it an OO loan, the banks would prefer you to do that, it will keep APRA happy. Ps. These views are my own and do not in any way reflect my employer's policies... my thoughts come with being in the shoes of a banker in general...
This is exactly right. With a few lenders you can just tell them your loan is now 'owner occupied' and they will lower your rate - no questions asked. You have to consider what would be the consequences if caught out? None probably.
