Loan: IP to PPOR (now) to IP again later

Discussion in 'Loans & Mortgage Brokers' started by mrbleuu, 17th May, 2020.

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  1. mrbleuu

    mrbleuu Member

    1st Jul, 2015
    I have moved back into my previous IP with the Covid-19 situation. It makes more financial sense than re-leasing the apartment in the current climate.

    If I convert my loan to 'live in' rate and in 6-12 months decide to re-rent it, it seems my bank will re-assess it for an IP. Before I convert my loan to PPOR from IP:

    1. what happens if I am renting the apartment in 6-12 months time, I go to change the loan to IP again but the bank re-assess the higher interest rate associated with IP or the IP itself as not financial for them? (I am only worried because of Covid situation)

    2. What happens if I lock in 3 years fixed rate at PPOR then decide in 6-12 months time to convert to an IP? will the bank force me to break the fixed period?

    Currently I am paying 0.36% more for IP but if the above cause issues I do not want to flick down to a lower rate transiently if I will have problems making it an IP again.
  2. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

    23rd Aug, 2015
    Bella Vista
    Majority of your banks, Changing it from IP to PPOR would not incur a reassessment but rather you have to show proof you're actually living there before they will readjust your rates, so a council or water rate will suffice.

    Short answer to your second question is a No, they will not make you break it.
  3. Lindsay_W

    Lindsay_W Well-Known Member

    1st Jul, 2015
    Generally they won't, not sure where the idea came from, did your bank tell you this?

    No they won't re-assess your borrowing capacity, and in reality there's no reason to notify them that you're renting the property out again, unless you specifically want a higher interest rate?

    No but again, why would you bother to notify them?