Moving to Australia means you need a place to live. Many expatriates will eventually look to purchase property. Some like to purchase before moving to the country.
Living here in a rental property, for at least the beginning of your stay, is the most common choice.
Before you put yourself in substantial debt, this allows you to try living in another country, with a different culture, to see if you will enjoy the lifestyle.
It also gives you more time to find the right house, at the right price, with affordable mortgage repayments.
Here are 10 tips for an expatriate buying property in Australia.
1. Start budgeting early
When buying property you must be able to cover your early costs, as well as your monthly repayments. The early costs include your deposit, lenders mortgage insurance (LMI), amongst others.
Covering these costs is essential, otherwise banks and lenders will not even assess your full application. A bank cannot believe you will service your loan repayments, if you are unable to cover the startup costs.
Savings is one of the best indications for banks that you know how to handle your money. Savings also make it easier for you to make your repayments.
2. Know your one-off costs
Other costs include a number of professionals and fees, that are normally one off payments. These include:
- A Conveyancer – In Western Australia (WA) they are called a settlement agent.
- A Buyer’s agent.
- Stamp duty.
- Inspection fees.
Our buyer’s guide has more information on the different professionals you will need.
Buyer’s agents are not necessary for a mortgage transaction to succeed. However, if you do not have time to search for property yourself, a good buyer’s agent will know the markets and areas they specialise in and can search for real estate within your price range, that covers what you are looking for.
3. Have as little debt as possible
If you owe money in Australia, you will need to declare it to the lender when applying for a mortgage. You are not obliged to declare any foreign debts that are not recorded by an Australian lending institution, or the tax office.
However, you need to make sure you can afford any repayments on your debts both here and overseas. A bank will only determine your eligibility based upon your Australian records.
Therefore, they will not know if you can repay your overseas debts or not. If you are not careful you could default on your repayments, lose your property and be liable for large sums of money you cannot afford.
4. Get a loan pre-approval, first!
A conditional pre-approval gives you a good indication of what you can afford. You need to be careful as they are indicative only and are NOT a formal agreement. This means a bank is not liable, and can therefore withdraw at any time.
The bank will give you a conditional pre-approval up to a certain loan amount, that they will set. You can then look at properties within this price range, and not waste time looking at properties you now know you cannot afford.
You must be careful when you apply for pre-approval. Follow the link to find out more about loan pre-approvals.
5. How much you can borrow
Knowing how much you can afford makes it easier, and a loan pre-approval is a great indication. It will indicate a maximum property value you can purchase, and what loan-to-value ratio (% LVR) will be most likely be approved.
% LVR is the percentage value of the property the bank will lend to you. The remaining percentage is how much your deposit will be. This is how banks decide how much they are willing to lend. In the US this is known as LTV.
For example, if the bank approves you for a loan at 80% LVR, you can borrow 80% of the real estate purchase price, and will need to pay a 20% deposit.
Borrowing over 80% means you need to pay lenders mortgage insurance (LMI).
LMI covers the banks if you default on your loan. It is a one-off payment.
Do not forget, you will also need a further 4 – 5% of the purchase price to cover your other costs, as mentioned above
6. A good mortgage broker makes things easier
Broker services are free for most personal loan types in Australia. A good broker will work with many different lenders, gives you options and saves you time.
Importantly, they can also help you keep a clean credit history in Australia. A decline for any type of loan adds a black mark to your Australian credit history. It makes lenders slightly more wary when assessing applications.
How can a broker help?
- They know the bank’ lending policies and guidelines.
- They work with many different banks and lenders.
- They will only apply to lenders they believe have the highest chance of approving your loan.
- A good broker takes a lot of the guesswork and lender research out of the equation, saving you time, and potentially, finding you a much better loan.
- They can also help you apply for a loan pre-approval.
A mortgage broker can connect you with many of the professionals mentioned above, such as conveyancers and buyer’s agents.
To apply today you can contact us here at the Home Loan Experts. Call 1300 889 743, or enquire online and our specialist brokers will contact you.
7. You need to know about your visa
Are you here on holiday or to work part time? Are you employer sponsored? These are important questions!
What kind of visa you have can determine the behaviour of the banks and lenders. Amongst other things, they need to know how long you will be in Australia, and what type of residency you are eligible for.
8. How you can find the right property
This can be a daunting task for Australians, let alone foreign nationals who do not know how, or where, to begin.
A buyer’s agent will not only find real estate for you. They can also negotiate the purchase of a property, including going to auction, all on your behalf.
A good agent can answer such questions as; Is the house going up in value? Are there schools, shops or doctors, and good public transport nearby?
A mortgage broker can direct you to a good buyer’s agent. If you do not want to use an agent, or cannot afford one, you can use online resources.
With a Google search you can find property listings through-out Australia. You can also find listings in some of our major newspapers.
9. You will need Australian Government approval
The Foreign Investment Review Board (FIRB) deals with all foreign investment within Australia. This includes the purchase of property by expats and migrants coming to the country, as well as investors buying from overseas.
10. Enjoy living in Australia!
Moving to another country can be hard! Finding your way around, making new friends, and meeting like-minded expats from other countries is often difficult.
Online resources such as InterNations, contain all types of great information for expats coming to Australia, from all over the world.
InterNations has a great expats guide covering many important topics. These include; moving to Australia, living in Australia, and working in Australia.
Apply online today!
Are you ready to buy your own house? We work with over 40 different banks and lenders, and specialise in mortgages for foreign nationals moving to Australia.
Contact us today on 1300 889 743, or enquire online and we will contact you.