Potential issues I may face as an Australian expat working in Dubai

Any general questions you might have in regards to loans and finance.
Genevieve
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Joined: Thu Apr 25, 2019 3:52 pm

Potential issues I may face as an Australian expat working in Dubai

Postby Genevieve » Thu Apr 25, 2019 3:54 pm

Hi, I’m an AU citizen currently in Dubai working as an engineer on a secondment earning roughly UAE Dirham 400,000. I’m looking to refinance an investment property and obtain cash out to purchase a second property in Melbourne. My investment property is valued at $850,000 with a $200,000 mortgage on it. I have a couple of credit cards with a combined limit of $15,000 in Au. and a couple of cards with $5,000 limit here. My credit history is great. I need the funds for a unit I purchased off the plan as it is now ready to settle. What are some potential issues I may face as an Australian expat working in Dubai?

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Otto Dargan
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Re: Potential issues I may face as an Australian expat working in Dubai

Postby Otto Dargan » Thu Apr 25, 2019 5:56 pm

Hello Genevieve. Welcome to the forums.

There are certain issues you need to be aware of when you’re refinancing an investment property to purchase another property especially for Australian expats working overseas.

You can cash outup to 80% of the value of your current investment property ($480,000) to use as the deposit to buy another investment property.
  • You’re earning in United Arab Emirates Dirham (AED) as such some lenders will use Australian tax rates when assessing your income rather than the tax rate of the country that you’re living in which can reduce your borrowing power. There are some lenders who will use foreign tax rates which will allow you to borrow more.
  • You will not have negative gearing benefits.
  • Loaded repayments on your foreign loans.
  • Most lenders will use somewhere between 60% and 90% of your actual foreign income.

We specialise in Australian expat home loans.

Give us a call on 1300 889 743 (+61 2 9194 1700 from outside of Australia) or fill in our free assessment form to find out if you qualify for an Australian mortgage.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Genevieve
Posts: 3
Joined: Thu Apr 25, 2019 3:52 pm

Re: Potential issues I may face as an Australian expat working in Dubai

Postby Genevieve » Thu Apr 25, 2019 6:35 pm

That sounds great. I’m just wondering if cash out is the best option to use the equity from my existing property or are there other options? What do you think?

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Otto Dargan
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Joined: Sat Sep 06, 2008 5:55 pm
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Re: Potential issues I may face as an Australian expat working in Dubai

Postby Otto Dargan » Fri Apr 26, 2019 11:34 am

Hi Genevieve,

Cash out or refinance is one of the simplest options when it comes to accessing equity. However, cross-collateralisation is another option. This is where more than one property is used as security for a mortgage rather than a standard home loan where you have one property securing one mortgage.

Pros for cross-collateralisation:
Cons of cross-collateralisation:
  • Concentrated risk: Market downturns can be devastating, as a significant drop in the value with just one property could make it that you can’t access the equity in your overall portfolio.
  • A risk to your home: If you can’t pay your home loan, the bank can pretty much decide where the proceeds of a sale should come from. This could potentially mean they can make you sell your home rather than one of your investment properties.
  • All properties need to be revalued when refinancing: The refinancing process is complicated and can come with significant costs depending on how many properties are cross-securitised.

If you can avoid cross-securitisation, it’s usually the better option.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Genevieve
Posts: 3
Joined: Thu Apr 25, 2019 3:52 pm

Re: Potential issues I may face as an Australian expat working in Dubai

Postby Genevieve » Fri Apr 26, 2019 12:42 pm

I may need to look into this more. Regarding cash-out refinance, when you say “loaded repayments on your foreign loans”, what do you mean?

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Otto Dargan
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Location: Sydney, Australia
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Re: Potential issues I may face as an Australian expat working in Dubai

Postby Otto Dargan » Fri Apr 26, 2019 3:18 pm

Hi Genevieve,

Australian lenders will apply a higher interest rate to your foreign debt as a buffer to make sure if your overseas rates were to rise, you would still be able to afford the repayments. It’s also known as loaded repayments on your foreign loans.

Our mortgage brokers specialise in Australian expat mortgages.

Give us a call on 1300 889 743 (+61 2 9194 1700 from outside of Australia) or fill in our free assessment form to find out if you qualify for an expat home loan.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts


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