To avoid paying more interest than you need to, if you have an ‘investment loan’ for a property that is no longer an investment, you may need to switch your loan over to an Owner Occupier one.
Why?
In order to meet APRA’s conditions, lenders have to limit the growth of their investment loan book. In addition, they also need to have more cash in reserve than they did previously. In an attempt to satisfy both these requirements, some lenders have announced increases to the rates on their existing investment loans. You can read more about the lending changes imposed by APRA here and here.
Questions for you…
1. Did you initially purchase your home as an investment property (with an ‘investment loan’) and then move in after it had been rented?
2. When you did move in, did you advise your lender and ask them to change the loan from an ‘investment loan’ to a ‘owner occupied home loan’?
If you didn’t quite complete the second step (and most of us haven’t since there was no real benefit to doing so in the past), it’s something you may want to consider doing sooner rather than later. Otherwise, you could end up paying a higher rate of interest on a loan that is ‘investment’ in name only.
If you’re not sure how to go about this, we are only an email or phone call away.
