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How to Turn Your Owner-Occupied Property Into an Investment

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In order to rent out your property, you will most likely need to notify your mortgage lender and get permission first. They may need to adjust your loan terms or interest rate. You will also be responsible for ensuring the property meets all the required safety standards for rental properties. If you’re looking to make your owner-occupied home into an investment property or move into an investment property you already own, there are a few things you should know. If this is something that you want to learn more about, read on as we explain everything you need to know about converting your owner-occupied property into an investment.

What’s the Difference Between Investment Properties and Owner-Occupied Properties?

The main difference between owner-occupied residences and investment properties is that owner-occupied residences are purchased with the intention of living in them, while investment properties are purchased with the intention of renting them out. Investment properties are usually purchased with the sole purpose of generating income through rent or capital gains. Owner-occupied residences, on the other hand, may be bought for a variety of reasons including but not limited to living in them, using them as a second home or using it as a holiday home.

How Do You Turn Your Home Into an Investment Property?

Refinancing to an investment loan means that you are now treating your home as an investment property. This has a few implications, the most important of which is that you will now be required to pay investment loan interest rates, which are generally higher than standard home loan rates. Additionally, you will need to factor in things like property management fees and other associated costs when considering whether or not to refinance an investment loan.

If you’re looking to take out a loan for an investment property, you should be aware that these loans are typically more expensive than taking out a loan for a home that you will live in. This is because lenders see investment properties as a higher risk. To get the best deal on an investment loan, look for lenders who don’t charge high fees and who offer competitive interest rates. You may also need to put down a larger down payment for an investment loan, which will lower your maximum loan-to-value ratio. Another factor to consider when taking out an investment loan is the amount of rental income you can expect to receive from the property. If this income is high enough, it can cover the cost of your mortgage payments and other expenses, making the property ‘positively geared’.

An investment loan is a loan that is used to purchase an investment property. Investment loans typically have interest-only payments, which means that the borrower only pays the interest on the loan and does not pay down the principal of the loan. Interest-only payments are popular because they allow the investor to minimise costs while establishing themselves and in some cases, write off the interest portion against their income if they’re making a rental loss – called ‘negative gearing’.

Conclusion

We hope this article proves to be useful when it comes to helping you gain a better understanding of how to turn your owner-occupied property into an investment. While it may seem like a lot of work, it will be worth it in the end as it can be a worthy investment that will pay dividends down the line.

Shore Financial is here to assist you with your home financing, making the home buying process effortless. Get in touch with us today and start working with one of the best mortgage brokers in Australia!






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