Overseas move impact
Question from albin updated on 31st October 2016:
We own an investment property in Auckland. It is jointly owned by my wife and myself. We bought it in September 2015 and have never lived there - it has always been rented.
The property has an LVR of 85% as of the current desktop valuation by QV. It is negatively geared and the yearly loss after income is about $25,000.
I am now moving overseas to work in Dubai for a long term.
So we are wondering what is the best way to structure the loan? If we move the existing mortgage to LTC does it affect the LVR? This is assuming we stay with same bank or can move to a new bank if required. Investment properties in Auckland need 40% LVR these days.
Our expert Kris Pedersen responded:
There shouldn't be an issue from a banking point of view if the correct move is to transfer this property over to an LTC. However, make sure that you get advice on this as I believe there is an issue in that if you are based overseas you need to have a NZ based director and some banks can't seem at times to understand this.
In regards to loan structure this is a hard one to advise on without knowing anything about you, your goals or plans with property over time.
A couple of things to also consider:
1. Banks are starting to look to implement margins on investment lending so potentially locking in a fair bit of debt might be worthwhile as then you should only wear the margin when the rate expires.
2. There has been a lot of tightening in the lending space across the main banks for offshore based borrowers so with you stating this is a long term move it may be worth looking at whether your current lender is a good option to have being based offshore. This isn't a quick answer with almost all main banks having different criteria around this.
Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies. www.krispedersen.co.nz