Investment vs owner-occupied home loans: what you need to know
06 February 2023
Did you know that banks and other home lenders have loans specifically tailored to property investors?
If you’re unfamiliar with what to expect with an investment property loan, read on to find out some differences between loans for investors and loans for owner-occupiers
Generally, loans for investors have higher interest rates. Investment properties pose more of a risk for lenders, especially if the borrower is depending on the rental income to make the loan repayments.
To be approved for either an owner-occupied or investment loan, you’ll need to meet the lender’s approval criteria. For both types of loans, typical considerations include:
- Loan to value ratio (LVR) – This refers to the amount of a loan as a percentage of the value of the asset it was used to buy. Lenders may request a lower LVR for an investment property loan (that is, a bigger deposit) than if you were applying for a loan to purchase a property to live in.
- Your income – In addition to how much you earn, lenders are likely to consider whether you’re self-employed, your employment tenure, your age at the time of application, employment type, whether you’re working overtime, allowances, bonuses, salary sacrificing, rental income, investment income, and more.
- Your savings – a demonstrated savings history may also assist lenders assess your suitability or capacity to meet repayments under the loan.
- Your credit history –credit history information may provide lenders with information about any difficulty you’ve had meeting financial obligations on credit products. Lenders may review your current and previous loans, credit card payments and other regular payments.
Can you move into your investment property?
Even if you originally purchased a property for use as an investment property, you may wish to move into the property at a later date for use as your main residence. If you do so, contact your lender to update your loan purpose.
What if you want to rent out a property you currently occupy?
Similarly, if you choose to rent out a property you’re living in, you’ll need to contact your lender to convert your owner occupier home loan to an investment loan.
Choose the right home loan for your goals
A Suncorp Bank home lending expert can answer your questions and help you find a loan suited to your unique requirements. As your dedicated lender, they can work with you every step of the way.
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Home Loans are provided by Suncorp-Metway Ltd ABN 66 010 831 722 AFSL No. 229882 Australian Credit Licence 229882 (“Suncorp Bank”) to approved applicants only. Please read the relevant Product Information Document, Lending Fees and Charges and Home Package Plus Terms and Conditions before making a decision regarding any Suncorp Bank products. Fees, charges, terms and conditions apply and are available on request or on our Product Information Documents and Forms page.
Any information or advice is intended to be of a general nature only and has been prepared without taking into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you before acting on it. We do not accept any legal responsibility for any loss incurred as a result of reliance upon it – please make your own enquiries.