Home Loan Question?

If you only want to live in it 6 months and then rent it then it would be an investment loan

Hi Free to Bee,

I just had a similar situation with a client and CBA and because the client was claiming the PPOR (Principal Place of residence) deduction for stampduty then the CBA would not allow gearing to be used for service as an investment loan. The way we overcame this was for the client to not claim the PPOR deduction until after settlement. Which in Victoria you can do for up to 12 months after settlement.
Depending on your state, check the rules and you may be in the same situation. Once we did this the CBA were happy to treat as an investment with all service calculations associated such as gearing and rental addback to be allowed.

More than one way to skin a cat.

Cheers

It is not mortgage fraud if the property is moved into and partially let to boarders/tenants with an appropriate lease put in place and the lender accepts these leases as servicible income and accepts the well explained and documented application to support why servicing is evident. When you discuss with the credit assessor in the credit department at the chosen lender about the situation so he understands your case and allows an otherwise marginal service case that may be initially rejected by the lender to now proceed.  Also, while one lenders servicability calculation may be lower than anothers, a lender that can 'Look outside the square' is also important in getting some applications approved, it is not always just about servicability. If that were the case then everyone could just do their own applications and we as brokers would soon be out of business. If the person buys the property as a PPR and does move in as their PPR under these circumstances and all income for the rental is also accounted for then what I am saying is that there is more than one way to skin a cat!! Under current laws the applicant can then within twelve months also clainm that PPR reduction if they do choose to stay in the property.

Under these curcumstances setting up a loan as an investment initially is totally legal and it leave options for flexible future decisions.

The preparation of your application, provision of a good explanation with all supporting documentation largly will determine if approval is gained or not.

Agree with Richard.

As mentioned, CBA aren't one of the highest ranking when it comes to serviceability. It's simply a matter of matching a lender that caters to your situation.

Cheers

Jamie

Hi Richard,

While I don't want to get into a tit for tat here

You may note in my responses that I made no mention of claiming the FHOG, obviously the client would need to make choices about if he where to claim the FHOG, if he was going to stay in the property, if he could claim the PPR, if he did renovate and move on, if he did decide to stay. My point was that if you talk to people outside the lenders direct that you can discuss many ways 'To skin that cat''. My objective is to find a client a solution to their problem LEGALLY and inform them at the time of meeting of all the options and all the ramifications of those options. The point was to stimulate thought, which is what these forums do obviously.

As you say, when you do the number of deals you do then you would know this of course and I respect your wisdom. Sometimes though you have to do the same, I have been a Top 100 broker nationally for many years, run a group that settles approximately $300M in mortgages annually and has been in finance since 1991 and for the last 2 years have been rated the top 20 brokerages nationally. Acknowledged for its ethics, morals, treatment of clients and customer service. We look outside the square and find solutions. LEGALLY.

As i say Richard, I respect that you are an experienced broker who has been posting on this site for some time. But I do take offence at insinuating that anyone, including myself, may do something illegaly.

Regards

I don't think the FHOG actually stipulates how long you have to live there to claim it, all you have to do, after you get it is say you intended to live there but found that you could not afford to after all, also as far as an investment loan goes, you just tell the bank that it took longer than you thought to find a decent tenant.