Can I still buy a property in Australia?
Late yesterday, the Turnbull Government announced that it would be axing 457 visas, a scheme that has been around for over 20 years.
The current scheme has instead been replaced with two new temporary visas, each with stricter eligibility requirements relating to work experience and English proficiency.
These reforms have been implemented immediately so what does it mean for qualifying for a mortgage in Australia and buying real estate?
What if I’m currently on a 457 visa?
Luckily, grandfathering will apply to these reforms.
If you’re currently on a 457 visa, have a year remaining and have a stable job with most of your savings in Australia, you can still qualify for a mortgage!
Despite the announcement by Malcolm Turnbull and Immigration Minister Peter Dutton, select banks are still accepting 457 visa holders.
Generally speaking, you can borrow up to 80% of the property value or up to 95% of the property value as an exception to normal policy.
Discover if you qualify for a mortgage by calling 1300 889 743 or by completing our free assessment form.
You still need FIRB approval
When buying property in Australia, you also need to get approval from the Foreign Investment Review Board (FIRB).
FIRB isn’t required if you’re in a spousal relationship with an Australian citizen and buying the property as joint tenants.
Check out the FIRB approval page for other rules and policy exceptions.
Three golden tips for stamp duty
The so-called foreign citizen stamp duty is a stamp duty surcharge that applies to temporary residents as well.
The surcharge only applies in New South Wales, Victoria and Queensland but varies significantly between each state, with additional land tax also applying in NSW and Vic.
However, Victoria has the most expensive surcharge by far.
For example, it’ll cost you $56,000 more in stamp duty and land tax to buy a $800,000 property!
If you don’t have long remaining on your 457 visa, your best bet is to simply wait until you get permanent residency and avoid the surcharges.
You’ll also be able to apply with more lenders and qualify for a cheaper interest rate.
The second option is to consider buying in either QLD or NSW where the additional duties aren’t as high.
The third option is to buy in one of the four remaining states that don’t apply the surcharge.
Please see the foreign citizen stamp duty page for more information.
How do I get a temporary work visa now?
Previously, the 457 visa allowed select migrants to fill more than 650 jobs on the Government’s Medium and Long-term Strategic Skills List (MLTSSL).
More than 200 jobs have since been cut from the list and replacing the 457 visa are two visa types under the so-called Temporary Skill Shortage (TSS) visa.
The first of these visas is the short-term two-year visa, which can be renewed for another two years, and a medium-term four-year visa targeted at specific high-level professions.
Unlike the 457 visa, applicants for both of these new visa types require two years work experience in the occupation they’re applying for and a criminal history check (previously this was a self-declaration).
Four-year visa applicants specifically also need to meet higher standards of English proficiency.
It’s not yet known how the banks will react to the new visa types.
However, we assume that short-term visa holders may find it difficult to qualify for a mortgage compared to applicants on the longer four-year visa.
The pathway to PR has changed as well
Previously, 457 holders could be eligible to become permanent residents (PR) after two years.
Under the reforms, there is no PR pathway with the two-year visa, while the PR eligibility period for four-year visa holders will extend from two years to three years.
If you’re a 457 visa holder and you’re looking to apply for a mortgage, please get in touch with one of our brokers to discuss your options.
If you’re a foreign citizen, we can also assist you to qualify for a mortgage although a much higher interest rate will apply.