It can be very difficult to research borrowing funds in other countries. This is often magnified when you are looking to purchase something like property.
The rules and regulations surrounding property markets can be complicated and difficult to understand, especially when you include the laws in that country and the lending policies and guidelines of banks and lenders.
If you are looking for an Australian loan, our mortgage lenders are no different. Read on for an outline of Australian home loans and how you can make your purchase easier.
You will also find links to other pages on our website that offer more in depth information about certain types of non-resident loans.
A question you must answer is whether or not to fix the rate of your loan. If you choose to do so, you can lose a lot of flexibility with your loan and you also may be charged fees (often called break fees as you are breaking a fixed contract), if you make changes or try to make extra repayments.
Read more about fixing your interest rate on our page about whether you should fix your home loan.
Changing the term of your mortgage can also affect your rates. For example, different Australian mortgage lenders may offer different rates for a 15 year term compared to a 30 year term.
How much you borrow can also affect what rates the banks will charge. Remember to also factor in lenders mortgage insurance if you are borrowing over 80% LVR (80% of the property value).
For information on interest rates and more you can talk to us.
If you are overseas, call +61 2 9194 1700 or enquire online.
Are you in Australia? You can call us on 1300 889 743 or enquire online.
How much can you borrow?
If you are an Australian citizen or foreign expatriate, how much you can borrow is affected by anything that helps the banks determine the probability that you will keep making your repayments. This will not only include your financial and employment situation, but also your physical location.
How much you can borrow will depend on the percentage of the property value a bank or lender is willing to lend. In Australia this is known as the Loan to Value Ratio or LVR (LTV in the United States).
Offset accounts and redraw facilities
Other features you may be able to include in a mortgage package include offset accounts and redraw facilities. There are a number of lenders in Australia that offer a 100% offset account. This is a cheque account which is linked to your home loan. It offers ATM and internet access as well as cheque book use, and helps you save on your loan repayments.
The interest in this account is usually lower than your mortgage rate. Instead of earning money on the offset account, you save on interest payments for your loan. Follow the link to read more about 100% offset home loan accounts.
A redraw facility allows you to withdraw extra funds you have paid into your mortgage account. If you need to purchase a car or holiday for example, it is cheaper to use the extra money you have paid on your mortgage than to take out a personal loan.
Australian mortgage lending policies
The table below indicates some of the policies of the banks and lenders. Many of these are dependent on your situation. A mortgage broker will be able to help you discover what options you may be eligible for.
|Owner occupied||Available (restrictions apply)|
|Interest-only||Available for a maximum of 15 years|
|Max LVR for purchases||80% for most loans (higher as an exception)|
|Max loan term||30 years|
|Min loan size||$100,000|
|Max loan size||$5 million AUD (higher as an exception)|
|FIRB approval||Not required for Australian citizens or PR holders|
|Lenders mortgage insurance||Required above 80% LVR (LTV)|
Australian mortgage features
|Owner occupied and investment properties||Available|
|P&I or Interest-only||Available|
|Extra repayments||Available (restricted for fixed rates)|
|Payment frequency||Monthly, Fortnightly or Weekly|
|100% offset account||Available|
|Loan increases (Top Ups)||Available (fees & conditions apply)|
Buying property in Australia
The two main reasons you will buy property in Australia are for investment and buying a home. Foreign buyers especially are often looking to invest in property for capital gains and rental income. There are certain rules and regulations however, that apply to expats, temporary residents and foreign citizens. Make sure you research these well before applying.
Banks generally consider many loans for temporary visa holders in the same way they assess a foreign citizen. Unless you are married to an Australian citizen these loans are therefore usually restricted to 80% or 90% of the property value.
Visa based restrictions and other lending guidelines are subject to change quite often for temporary residents. If you would like to know more please read our page on temporary resident mortgages as it is updated regularly.
Foreigners living overseas often invest in property in Australia. They may also purchase property for a friend or relative to live in. They commonly look for Melbourne or Sydney real estate, or properties along the East Coast. People from the United States (US), Singapore, Mexico and the United Kingdom (UK) are those most commonly interested in investing in Australian property.
In order to apply, you need approval from the Australian Government agency, the Foreign Investment Review Board (FIRB). Once you have their approval you are then legally allowed to apply for a foreign mortgage in Australia.
If you are outside Australia and looking for an investment property with Australian foreign national lenders, you can contact us on +61 2 9194 1700 from 9am to 5pm Sydney time (GMT +10), or enquire online and we will contact you.
From within Australia you may call 1300 889 743 or enquire online.
Many Australian citizens living overseas like to purchase property in Australia. You do not need to obtain FIRB approval, and unless you cannot prove a foreign source of income, you should not pay a higher interest rate.
It is important to choose your lender carefully, as living overseas can cause a number of challenges which some banks and lenders may not be willing to, or cannot work around. A mortgage broker specialising in overseas Australian mortgages who works with many banks and lenders can find the right lender to suit your needs.
Foreign Investment Review Board (FIRB)
Unless you are an Australian citizen or permanent resident, you need to get approval from the Australian government to purchase property in the country.
A New Zealand citizen holds a visa classified as a “special category visa” and they also do not need to apply for FIRB approval. Our page on FIRB approval can help if you would like more information.
Where can I find out more?
Are you an Australian expatriate, temporary resident or foreign citizen looking to purchase property in Australia? We here at Home Loan Experts specialise in non-resident mortgages. We work with over 40 different banks and lenders and can therefore find the most competitive deals and interest rates.
Are you overseas? You can contact us on +61 2 9194 1700 to talk so us, or enquire online and an expert broker will contact you.
If you are in Australia you can call us on 1300 889 743.