"Help, investment v's business loan"

[WebBoard]

From: Anonymous


We have 2 apartments on residential loans
We have now decided to use these apartments as holiday rental. Does this change things with our residential home loan, will it go to a business loan? If so will they take more equity than the 20% x 2?

Thanks in advance.

 

[Rolf Latham]

Reply: 1
From: Rolf Latham


Hi

NO

There is no change required in LVR with most lenders.

Whether you look at holiday or full time rentals - in most areas similar outcome

If you have signed a lease though which is to a management group that may make it a serviced apartment in which case some lenders get very uppity

ta

Rolf
Rolf

 

[WebBoard]

Reply: 1.1
From: Anonymous


Thanks Rolf,another question if l may?

Do they change you over to business or leave you as resi invest loans?

Thanks

 

[Ric1]

Reply: 1.1.1
From: Ric1 .


Hi Rolf,

Another question, if I may:

You wrote: "If you have signed a lease though which is to a management group that may make it a serviced apartment in which case some lenders get very uppity"

Why?

Thanks,

Ric

 

[Rolf Latham]

Reply: 1.1.2
From: Rolf Latham


If its a straight holiday rental the bank will leave you on a residential investment loan.

The transaction is still "personal investment purposes" rather than commercial in nature.

Ta

Rolf

 

[Rolf Latham]

Reply: 1.1.1.1
From: Rolf Latham


Hi Ric

A lot of management groups want exclusive rights to your property for a length of time. This means that the liquidity of the property is affected, since it can usually only be sold with the lease in place.

Some leases can be terminated with little notice and can therefore allow the place to go back to a straight residential.

ta

Rolf

 

[WebBoard]

"Help, residential v's business loan"

Reply: 1.1.2.1
From: Anonymous


Rolf, l nearly understand, wouldn't two apartments on the tourist market (weekend holidays, overnighters, etc) be classed as commercial? l am seriously hoping not....Talk soon and thanks for your patience.