Citizen of Denmark wants to know more about investment loans

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MelTwU
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Citizen of Denmark wants to know more about investment loans

Post by MelTwU »

Hej Brokers!

I am a resident of Denmark who wants to invest in an Australian property. My friend owns a construction company back there or do you guys call them developers? He says his company is construction a new apartment complex in Sydney.

And yes, he coaxed me into investing in the property (he sees great profit in it). I did a background search of my own and found out that Australia is actually is a good place for investment.

My question to you is, can I as a foreigner, get an investment loan? Also, my friend said something about getting approved from the Australian government?

I work for a private company and my yearly income (when compared to Australian currency) is about $97,000.

Much thanks,

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Otto Dargan
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Re: Citizen of Denmark wants to know more about investment l

Post by Otto Dargan »

Hej MelTwU!

Thank you for posting a query.

Even if you are a foreigner, you are eligible to invest in Australian properties. I think what your friend means is that as a foreign investor, it is mandatory that you get an approval from the Foreign Investment Review Board (FIRB).

FIRB is a government body that monitors all the direct foreign investment in Australia. Non-residents who wish to buy or invest in Australian properties are required to be approved by FIRB. The government agency is directly involved because the investments need to be beneficial for the Australian economy.

Since you are a foreign investor, you need be careful about these common guidelines:
  • The property you are trying to purchase or invest in must be newly built. This criterion is met since the property is going to be built.
  • You cannot buy an old residence or established dwelling as an investment property.
  • Lenders will also favour properties that lie in cities and surrounding suburbs.
Please feel free to post any question if you want to know more. You will need at least 20% deposit plus extra funds for stamp duty.

Cheers,
Otto
Otto Dargan
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MelTwU
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Re: Citizen of Denmark wants to know more about investment l

Post by MelTwU »

Thank you, Otto. You have provided me with a really good answer to my question. How long will the approval take? How much can I borrow under your investment loan for foreigners?

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Otto Dargan
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Re: Citizen of Denmark wants to know more about investment l

Post by Otto Dargan »

Hi MeITwU,

If you meet all the guidelines set by FIRB, getting approved by the FIRB will not take a long time. It might take anywhere from two weeks to a maximum of 30 days.

The amount you can borrow is actually quite similar to the mortgage policies of Denmark. As an foreign investor , you can borrow up to 80% of the property value(LVR). Most lenders will not agree to finance a mortgage of over 80% because then it will be a high risk for them.

You will also need to prove your income via supporting documents. Please be aware that these documents need to be in English and not your national language.

Cheers,
Otto
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P | 1300 889 743
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pine
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Re: Citizen of Denmark wants to know more about investment l

Post by pine »

Hi Otto,

I am a citizen of Norway currently on a 457 working visa. I’ve been working for an Australian doftware company for almost a year now. My monthly income is about $20,000. I want to apply for a home loan to buy my own place. I’m looking at a place in Albany for $400,000 and have saved around $65,000.

Am I eligible for a mortgage? Do I need Foreign Investment Review Board’s approval too?

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MelTwU
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Re: Citizen of Denmark wants to know more about investment l

Post by MelTwU »

Otto! I am pleasantly surprised to find such these similarities. I thought rules for investment was different there. What is LVR and what documents will the banks want to see?

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Otto Dargan
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Re: Citizen of Denmark wants to know more about investment l

Post by Otto Dargan »

pine wrote:Hi Otto,

I am a citizen of Norway currently on a 457 working visa. I’ve been working for an Australian doftware company for almost a year now. My monthly income is about $20,000. I want to apply for a home loan to buy my own place. I’m looking at a place in Albany for $400,000 and have saved around $65,000.

Am I eligible for a mortgage? Do I need Foreign Investment Review Board’s approval too?
Hi pine,

Even if you are on a 457 working visa, you are absolutely eligible to get a home loan. Yes, you will have to be approved by the FIRB to apply for a mortgage.

There are other conditions to be careful about as well. These are:
  • You can only buy one property for the sole purpose of living in it. It needs to be sold if you decide to move out of the country or the house.
  • If you want to invest in a property, it must be a newly established one.
I also have to mention, if you are planning to buy the property with an Australian citizen as ‘joint tenants’ then you do not need FIRB approval.

From the details, I can see that you are looking to borrow 83% of the property value (LVR). As long as you can prove you have a stable employment and prove you can afford the loan then we a lender who can consider a loan up to 90% LVR.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
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Otto Dargan
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Re: Citizen of Denmark wants to know more about investment l

Post by Otto Dargan »

MelTwU wrote:Otto! I am pleasantly surprised to find such these similarities. I thought rules for investment was different there. What is LVR and what documents will the banks want to see?
LVR stands short for Loan to Value Ratio which is the amount you are borrowing. For instance, if you are borrowing at 80% LVR then it means you are putting 80% of the property value as the security or collateral for the mortgage.

I believe LVR is known as LTV (Maximum Loan to Value ratio) in your country.

Each lender has their own policies regarding that they would want to see as proof of income. Being a non-resident, the payslips you show might not meet the standard required by the lenders.

Hence, these documents are needed to verify your income.
  • A letter from your employer.
  • A copy of your employment contract.
  • Two recent payslips.
  • Three months of bank statements showing your salary being deposited into your account or
  • Tax returns for the last financial year.
Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

pine
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Re: Citizen of Denmark wants to know more about investment l

Post by pine »

A lender? Uuhh.. won't I get a choice to see which lender will fit my situation the best? :?

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Otto Dargan
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Re: Citizen of Denmark wants to know more about investment l

Post by Otto Dargan »

pine, the amount you want to borrow is over the limit of 80% which is only possible with one of our lenders. However, if you want to widen your choices then I suggest you increase your deposit so that the amount you are borrowing drops to 80% LVR.

Alternatively, you can even speak to any one of your expert mortgage brokers on 1300 889 743 or enquire online for free.
Otto Dargan
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P | 1300 889 743
Home Loan Experts

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MelTwU
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Re: Citizen of Denmark wants to know more about investment l

Post by MelTwU »

One more question, how will the lenders assess my income?

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Otto Dargan
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Re: Citizen of Denmark wants to know more about investment l

Post by Otto Dargan »

MelTwU, Australian lenders will assess your income by first converting your annual income into Australian dollars and then reduce it by 10% as a buffer in case of currency fluctuations. Some lenders we know will only use 80% of your income to allow for exchange rate fluctuations.

If you are still confused then you can always ask our mortgage brokers on +61 2 8668 4038 (for overseas clients) or drop a free enquiry. They will be able to give you better advice after assessing your situation.

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

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MelTwU
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Re: Citizen of Denmark wants to know more about investment l

Post by MelTwU »

Thank you so much, Otto. I will arrange a time to call your office soon.

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