Owner home loan for investment property

Hi

I was told recently that as I rent my PPOR, I can classify one of my IP loan as a home owner loan, hence getting a better rate. Any opinion on this? Where to check?

Yann

 

Not legally. Check with the bank!

 

APRA warns banks over investor home loan switch

As per Terry's comment, definitely not legal but it's happening A LOT. I've lost count of the number of people I've chatted with who have switched IP loans to owner occupier to try and beat rate rises. Some with encouragement from their brokers

 

And I am not suggesting you not do it. Any penalties if caught would be unlikely.

 

Wow! This seems so unlike you, you are our voice of most legal oriented reason!

 

For the individual I don't think there would any great penalty but if it continues en masse then APRA's hand will be forced, they've already fired the warning shot.

 

Thanks all, it was from my broker and loan most likely with ANZ

 

ANZ do not ask any questions at all...

 

There has been talk recently of how the banks now have the IO lending under the required level, I was thinking, gee, they did that very quickly ? then I read the other day that APRA is about to crack it on a few banks, now I can see why.....

 

I've definitely heard of a few people following a route similar to this. Hmm!

 

Yep I did it with ANZ. Just called them and said that I'm planning to live there. They changed it over the phone for me

 

How could APRA seriously ever monitor this?
Firstly when you purchase a property you have not yet acquired it so you cannot prove to the bank yet it will be your PPOR.
This means the bank would have to contact all its customers post settlement and collect sufficient paperwork to prove they are infact living there (which could be as simple to get around as changing your mailing address).

IMO It really is not worth there time to worry about this. Most people don't invest, most people that do invest are honest the few that are not will get away with it.

 

Ii'm in the opposite boat. For our new PPOR the banker said we needed to buy it using an IP loan as he told us servicing wouldn't pass if it was a PPOR. Once we sell the other properties our servicing would be fine and then we'll change it to a PPOR loan with minimal outstanding debt... (I suppose we could tell the bank now and knock off 27bp).... would they want to review our servicing though.... hmmm

 

They can't. But they can push the banks to tighten up. Requiring borrowings to provide some evidence of actually living in the property would help (although it is easy to provide evidence you are living somewhere you are not).