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

    Joined:
    1st Jul, 2015
    Posts:
    7
    Location:
    Sydney
    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

    Joined:
    23rd Aug, 2015
    Posts:
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    Location:
    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

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    1st Jul, 2015
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    Location:
    QLD
    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?