Changing Investment Loan to Home Loan

Investment loans serve as a useful tool for individuals seeking to invest in real estate and build wealth. However, there may come a time when you wish to transition from an investment loan to a home loan. This article will guide you through the process of making this transition, highlighting important considerations and steps to take along the way.

Understanding Investment Loans

Before delving into the process of changing an investment loan to a home loan, it’s essential to grasp the concept of investment loans. An investment loan is a type of loan specifically designed for purchasing an investment property. It allows investors to borrow money to fund their property purchase and generate potential income through rental returns or capital appreciation.

Investment loans come with certain benefits, such as the potential for long-term financial growth and the ability to claim tax deductions on interest payments. However, they also carry risks, including fluctuating interest rates, property market volatility, and potential rental income fluctuations.

Transitioning from Investment Loan to Home Loan

There are various reasons why someone might consider changing their investment loan to a home loan. For example, you may have initially purchased a property as an investment but now wish to make it your primary residence. Alternatively, you might have accumulated enough equity in your investment property and want to leverage it to purchase a new home.

Before making the switch, it’s important to consider a few factors. First, evaluate your current financial situation to ensure you have sufficient income and financial stability to support a home loan. Additionally, assess the equity you have built in your investment property and determine if it’s enough to meet the requirements of a home loan.

Steps to Change an Investment Loan to a Home Loan

Changing an investment loan to a home loan involves several steps. By following these steps, you can navigate the process smoothly and secure the best possible terms for your new home loan.

  1. Assessing Current Financial Situation: Begin by evaluating your financial position, including your income, expenses, and credit score. Ensure that you have a stable income and a good credit history, as these factors will impact your eligibility for a home loan.
  2. Researching and Comparing Home Loan Options: Research different home loan products available in the market. Compare interest rates, loan terms, repayment options, and any additional fees or features offered by various lenders. This will help you identify the most suitable home loan for your needs.
  3. Contacting Lenders and Mortgage Brokers: Reach out to lenders or mortgage brokers to discuss your situation and explore potential home loan options. They can provide personalized advice, guide you through the application process, and assist with any questions or concerns you may have.
  4. Applying for a Home Loan: Once you’ve identified a suitable home loan, gather the necessary documents and submit your application. Typical documentation includes proof of income, identification, bank statements, and details of your existing investment loan.

Potential Challenges and Solutions

Changing an investment loan to a home loan may come with certain challenges. It’s important to be aware of these potential obstacles and find appropriate solutions to overcome them.

  1. Equity and Property Valuation: The equity in your investment property plays a crucial role in obtaining a home loan. If the value of your property has increased significantly since you purchased it, you may have more equity to leverage. However, if property values have declined, you might face challenges in meeting the lender’s equity requirements. In such cases, you may need to consider alternative solutions, such as saving a larger deposit or exploring different lenders.
  2. Lender Requirements and Eligibility Criteria: Lenders have specific eligibility criteria for home loans, including income requirements, credit history checks, and debt-to-income ratios. Ensure that you meet these criteria and address any potential issues before applying for a home loan. If your financial circumstances don’t align with a lender’s requirements, seek advice from a mortgage broker who can guide you to lenders that may have more flexible criteria.
  3. Refinancing Costs and Fees: Transitioning from an investment loan to a home loan usually involves refinancing. Refinancing can incur costs such as discharge fees, valuation fees, and application fees. It’s crucial to factor in these costs and compare them against the potential benefits of switching to a home loan. Consider seeking professional advice to determine if the financial advantages outweigh the associated fees.

Benefits of Changing to a Home Loan

Changing your investment loan to a home loan offers several benefits that can positively impact your financial situation.

  1. Lower Interest Rates: Home loans generally come with lower interest rates compared to investment loans. By transitioning to a home loan, you can potentially reduce your interest expenses and save money over the loan term.
  2. Greater Financial Stability: Owning your primary residence provides a sense of stability and security. It eliminates the uncertainty associated with investment properties, such as finding tenants, managing rental income, and property market fluctuations.
  3. Tax Benefits: While investment loans offer tax benefits through deductions on interest payments, home loans can also provide tax advantages. For example, you may be eligible for certain tax concessions or exemptions as a homeowner, depending on your jurisdiction. Consult with a tax professional to understand the specific tax implications in your area.


Transitioning from an investment loan to a home loan involves careful consideration, research, and planning. By evaluating your financial situation, researching home loan options, and addressing potential challenges, you can successfully make the switch. Remember to compare lenders, seek professional advice when necessary, and weigh the benefits and costs associated with changing your loan. With proper preparation and understanding, you can secure a suitable home loan that aligns with your current needs and future goals.


  1. Can I change my investment loan to a home loan without refinancing?
    • Generally, changing an investment loan to a home loan requires refinancing. Refinancing involves applying for a new loan to pay off the existing investment loan and transition to a home loan.
  2. Will changing my investment loan affect my credit score?
    • Changing your investment loan to a home loan may have a temporary impact on your credit score. When you apply for a new loan, lenders may conduct a credit check, which can result in a slight decrease in your credit score. However, managing your new home loan responsibly and making timely payments can positively impact your credit score over time.
  3. Can I use the equity from my investment property to fund my new home loan?
    • Yes, if you have built equity in your investment property, you can leverage it to fund your new home loan. The equity can be used as a deposit or to cover a portion of the purchase price.
  4. What documents do I need to provide when applying for a home loan?
    • When applying for a home loan, you will typically need to provide proof of income, identification documents, bank statements, tax returns, and details of your existing loans.
  5. How long does it take to complete the process of changing an investment loan to a home loan?
    • The time it takes to complete the process varies depending on various factors, including the complexity of your financial situation, the lender’s processes, and the efficiency of your communication and document submission. On average, it can take several weeks to a couple of months to finalize the transition from an investment loan to a home loan.

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