Secondary occupiers under the LVRs
Question from Richard updated on 21st April 2017:
In the new LVR restriction wording it mentions that secondary occupiers are treated as ordinary owner occupiers.
What's to stop a current rental property owner either moving back in temporarily or leaving it empty after the next lease has expired (and treating it as a secondary residence for an interim period), topping up their loan up to the maximum 80% LVR (assume they are currently below 40% LVR), and then moving out again/re-renting and saying if asked that there had been a change in circumstances?
What checks in reality will the bank actually make in respect of this?
Our expert Kris Pedersen responded:
I think firstly there will need to be an element of common sense with this. For example, if your holiday home is down the road from your main residence that is going to raise alarm bells.
Also, be aware that the Reserve Bank is all over the banks in regards to them allowing clients to flaunt the rules. If it is a rental property already I don't believe any banks would let this happen.
I wouldn't recommend that you try this as you would be opening yourself up to have your mortgage called in. While you may think that this is unlikely there have been some stories floating around.
Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies. www.krispedersen.co.nz