he wants to live in the city due to proximity to his workplace etc. If John Smith is keen to purchase a property and enter in the market but does not want to change his current lifestyle i.e. In recent years, the trend in an investment strategy called “ rentvesting” means that homemakers rent out their property to generate rental income, while they move and live in a rental property at a desired location. The difference between the two loan types is an additional $25,000 in borrowing (around 4.1%). This will still give him a borrowing capacity of $625,000 depending on the lender. If he purchases a property as an investment, he will be earning $500 per week as rent but will also incur investment property expenses and his living arrangement expenses eg: rent. If John purchases a property as his home to live in, he can get a loan of up to $600,000 depending on the lender. super per annum.Īs per mandatory HEM, his living expense is calculated as $2,100 per month, and has a credit card limit of $5,000. John Smith is single with no dependent earning base income of $90,000 excl. The biggest lever in this decision hinges on the applicant’s borrowing capacity under the two loan types. However, to other purchasers, the case for an owner occupier or investment loan is not always straight forward. First home buyers who wish to purchase a property to move into will most likely be applying for an owner occupied home loan. To certain purchasers, the delineation between an owner occupier vs investment purpose is clear. What is the difference between the two types of loan and why does it matter? When getting a home loan, one important aspect to settle on is whether it should be an owner occupied or an investment loan.
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