The Differences Between Investor and Owner Occupier

Ever wondered what the difference is between an investor and an owner occupier? Feeling confused about whether you need an investment loan or an owner-occupied loan? Read our summary below for more info!

Definitions: owner occupier vs. investor

As the name suggests, an owner-occupier is someone who purchases a property and lives in it. An investor is someone who purchases a property for investment purposes, i.e., with the intention of renting it out to tenants in order to make an income.

Loans: owner occupied vs. investment

Owner-occupied loans are taken out by individuals who buy property as their principal place of residence. Investment loans are for those who – surprise surprise – are in the market to purchase investment properties.

Key differences between owner-occupied loans and investment loans

– Interest rates and fees:

  • Generally speaking, investment loans attract higher fees and interest rates than owner-occupied loans. This is because investors are thought to present a higher level of risk to lenders than owner-occupiers.

– Lending criteria:

  • Investment loans typically have stricter lending criteria and in some cases require larger deposits than owner-occupied loans.

– Tax benefits:

  • You are often able to claim a tax deduction for the interest charged on an investment loan, however this is not the case for owner-occupied loans.

Switching an owner-occupied loan to an investment loan

There may come a time when you want to move out of your principal place of residence and rent it out. In this instance, you will need to switch your loan from an owner-occupied loan to an investment loan. A mortgage broker can guide you through this process and help you to choose an investment loan product that suits your needs and goals. It may also be worthwhile chatting to your accountant or a tax professional before moving forward to ensure that you understand the tax implications of your decision.

Switching an investment loan to an owner-occupied loan

If you want to convert your investment property into your principal place of residence, this will also generally require a change of loan. Again, a mortgage broker can help you to understand your options, navigate the switch and liaise with your chosen lender on your behalf. Bear in mind that terms and conditions apply when switching from an investment loan to an owner-occupied loan, and making this change is likely to have tax implications. So again, we suggest discussing your plans with a tax professional before making any decisions.

Keen to learn more about owner-occupied loans, investment loans and the various options available to you? Our experienced team of MoneyQuest finance specialists can help! Contact us by checking out our website here. Then click ‘make an enquiry’ and simply follow the prompts.



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