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Can I keep my home as a rental when I move out?

Bayley Clarke · Mortgage broker on the road · Last checked 11 November 2026 · 8 min read

Can you, and what the loan says

Usually yes, as long as you can carry both. Keeping the old place means two loans at once, and the bank runs your income plus the rent it's willing to count against the existing loan and the new one. If it passes, great, and in a lot of cases the deposit for the next place comes out of the equity in the one you already own. If it doesn't, you've still got three ways to sell: bridging, a same-day settlement, or sell first and rent for a while. Selling isn't the default. It's one of four options, and the numbers pick between them.

One thing to do before the tenants move in: tell your lender. An owner occupied loan on a property you no longer live in usually needs to be switched to an investment loan, which can change the rate. That's a conversation, not a crisis, but it's one to have up front.

Scheme, grant and stamp duty strings attached

If you bought with the 5% Deposit Scheme, this is the big one. The scheme is for a home you live in as an owner occupier, and that requirement keeps running while the government guarantee is on your loan. Stop living there without an exemption your lender has agreed to, and Housing Australia's own wording is that your lender may require you to pay lenders mortgage insurance or other significant costs. The way out is getting the loan to 80% or less of the property's value, at which point the guarantee has nothing left to do. Paying the loan down and the property growing both move you there, and a revaluation plus a refinance out of the scheme is usually how it happens.

Stamp duty concessions are a separate rulebook set by your state. Generally you have to move in and live there for a minimum period, and moving out early can mean paying the duty back. The two rules get mixed up all the time. Check both before anyone signs a lease.

How much of the rent the bank counts

Not all of it. Some lenders count 95% of the rent, plenty count 90%, others 80%, and a few as low as 70%. They're pencilling in a vacancy and a repair bill. On $500 a week, the difference between 95% and 80% is about $75 a week of income one lender sees and the other doesn't, and that flows straight into how much you can borrow for the next place.

Renting to family is where it gets fiddly. Most lenders want a signed lease, ideally through an agent, though some will take a private arrangement if the rent lands in your account consistently. When the amount jumps around, many lenders count the lowest month, so one light payment can set the number for the whole application. Same day, same amount, every time.

The offset and redraw trap

This is where good intentions cost money. Redraw is a repayment. If you've been paying extra into the home loan and you redraw it after the place becomes a rental, that redrawn money is new borrowing, and its purpose is whatever you spend it on, not the property. An offset is different: it sits beside the loan, so the loan stays exactly what it was on day one.

So once you're holding two properties, the cash usually wants to sit in the offset against the home you live in, because that's the debt you can't claim. You can have the rent paid straight into that offset and the investment's bills come out of it, and your accountant mainly needs the investment loan statement and the property manager's summary at tax time. Some people take it a step further with debt recycling, deliberately turning home loan debt into investment debt over time. That one is a planner and accountant conversation before it's a lending one.

Tax: what changes when it becomes a rental (accountant first)

I'm not your accountant, and this is the part to take to them before the tenants move in. Generally, once the old home is earning rent, interest on the debt that was used to buy it can become deductible, along with other costs of owning a rental. The tax office looks at what the money was used for, not which property holds the loan. So if you pulled $50k out of the old place for a car along the way, putting tenants in doesn't turn that slice into a deduction, and the loan on your new home isn't deductible either.

Keeping the loans separate

Anything borrowed for an investment purpose stays as its own loan. Full stop. Blend investment and owner occupied debt in one account and every interest statement becomes a spreadsheet exercise for your accountant for the rest of the loan. The moment the old home becomes a rental is the right time to look at the structure: the original loan on its own, any cash out split by what it was for, and the new home loan standing alone, sometimes at a different lender so the two properties aren't tied together.

Related reading

Investment property loans: how the bank sees your purchase The First Home Guarantee explained Every next home answer in the library The full guide: Cross-collateralisation, explained The full guide: Interest only vs principal and interest The full guide: Rentvesting vs buying a home

Straight answers in this guide

Do I have to sell, or can I keep this place as a rental? Can I rent out the home I bought with the 5% deposit scheme? Do I have to live in my first home, or can I rent it out? If I move out and rent my place out, does my mortgage become tax deductible? Is it worth living in the property first to get the stamp duty exemption? How much of the rent does the bank actually count? I rent my investment to a family member and the rent is inconsistent. Will the bank still count it? Can rent from my investment property go into the offset against my home loan? Can I use redraw on my investment loan? What is debt recycling, and how does it help me buy an investment property? Should I combine my home loans into one, or keep them separate?

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