bdc,
It is possible because i just did what you are proposing. I basically got approval via an investment loan then once settlement occured i applied for the first homebuyers grant directly from the OSR. I'm currently living in the property for 6 months, but the bank would n't have any idea as long as i am fulfilling the repayments. The government (OSR) will not reject your application, because they don't check any details of your finance (They don't care!). Theres a few things you should weary of:
- As its an investment loan, the bank will assume you are not a FHB, therefore, will assume you need funds for the payment of stap duty and deposit. So you need to show evidence you have funds for the deposit and stamp duty. Unless you have this they may reject your application.
- At settlement you will need to either pay for stamp duty then get a refund back from the OSR or you can get your solicitor to fill out a stamp duty exemption form. I did the later. The banks generally wont know your solicitor filled it out, but some banks might be more diligent.
- You will need to apply directly to the OSR for your grant, it a no fuss process, i got my money with 14 days of settlement. Just need to supply your certificate of title showing your name on it.
If your looking for an investment property and want to take advantage of the FHB grant i would recommend it. It worked out well for me, i borrowed 95% with LMI capitalised and then recieved the FHB grant. So effectively when i purchased a $485k investment property, i only injected about $12k of my own cash.
Even, if you plan to live in the property for longer than 6 months its a good idea, especially if you need to maximise your borrowing capacity. Just make sure you can afford the repayments, as you wont be getting rent.
Fuzzboy