Can I Rent Out My House Without Telling My Mortgage Lender?

If you decide to rent out a house you are still making mortgage repayments on, you need to tell your mortgage lender. In some cases, renting out your home won’t make a difference in loan terms or interest rates. However, depending on the type of home loan you have, deciding to rent out your home could have a significant impact. If your lender finds out you are not living in your home and are renting it out without notifying them, there could be some legal ramifications.

Owner-Occupied Home Loans vs. Investment Home Loans

In general, there are two main types of home loans: owner-occupied and investment. Owner-occupied home loans are for individuals who intend to live in their home, making it their primary place of residence. Investment loans are for individuals who plan to use the property as a rental to make extra income. Each of these loans has different interest rates and LVR limits. 

Tax Implications

There are also tax implications for each type of property. If you live in your home, you are usually free of tax consequences. Once you start renting out the property, you need to declare the net rental income in your tax return. However, you can claim rates and running costs as well as depreciation. If you decide only to rent out part of your home and live in the other part to help pay off some of your mortgages, you may have to pay some capital gains tax. You can also only deduct some of the expenses. 

Before you decide to rent out your home, you must inform your mortgage lender as it could impact your loan terms and interest rate. If you would like to speak to an experienced mortgage broker about the possibility of renting out all or part of your home, contact Mortgage House today.