Definition
Owner Occupied
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Owner occupied refers to property whereby the owner is the resident who lives in it.
It is a real estate term that is most often used in mortgages.
This is because there are generally two categories of property according to a lender.
- Owner-occupied
- Investment property
Owner occupied property tend to enjoy less stringent criteria for loan assessment as lenders feel that home owners who are borrowers would be much less likely to default on home loans as their family well-being is on the line.
In addition, investment property tend to have borrowers who are leveraged to the hilt and can be risky customers to provide excessive financing to.
This is also why owner-occupied property tend to obtain higher LTV compared to investment property.
It’s not uncommon for a property to obtain 80% LTV when a borrower applied for a home loan, but later the bank found out that it was for investment purposes and adjusts the LTV to 50%.
This was already the case even before the cooling measures and TDSR policies were implemented.
It must be said that investors sometimes make an effort to have their investment properties classified as owner-occupied by lenders just so to obtain a higher LTV for real estate acquisitions.
In some cases, a fine line separates the two categories and “smart” investors find a ways exploit loopholes.
Owner occupied properties also enjoy lower property tax from IRAS.
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