Do I need FIRB approval to buy a house in Australia?

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andylau
Posts: 35
Joined: Thu Jun 20, 2013 7:13 pm

Do I need FIRB approval to buy a house in Australia?

Post by andylau »

Good morning. I wish to know about the FIRB regulations for foreigners wanting to invest in Australian properties, namely do I need FIRB approval to buy or not?

I am very new to investing internationally however I do have some experience in the local market here in Singapore. I honestly do not know much about FIRB but a friend mentioned it and the term FIRB approval stuck in my head.

FYI I am looking to get a loan of about $700,000 and I will be investing in a $900,000 unit in Sydney. Also how much higher are foreigners charged than locals?

Please get back to me ASAP, thanks

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Otto Dargan
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Re: Do I need FIRB approval to buy a house in Australia?

Post by Otto Dargan »

Hi and welcome to the Home Loan Experts forums andylau,

FIRB approval is required for all purchases made by foreigners. The only exception is if you are married to an Australian citizen and both of you are applying for the loan together.

You can also apply for FIRB pre-approval once you have decided to invest in Australia.

Keep in mind that as a foreign citizen you are also only allowed to buy a new property or a vacant land to construct a new building. If you have children on a temporary visa living in Australia then you can buy a property and rent it out to them.

The interest rates for foreigners are necessarily higher than the rates offered to locals. In fact your can also apply for professional packages and loan discounts four your loan. Often a mortgage broker will be able to negotiate a lower rate for you than that is advertised by the lenders.

Lenders will also restrict how much you can borrow to only 80% of the property price. In your case you are looking to borrow about 77.78% which is acceptable. However if you have trouble proving your income or have documents which have not been translated to English then you might only be allowed to borrow up to 75%.

I hope that answers your question.

Cheers,
Otto
Otto Dargan
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Cindy Woo
Posts: 47
Joined: Thu Jun 27, 2013 4:47 pm

Re: Do I need FIRB approval to buy a house in Australia?

Post by Cindy Woo »

Hi I manage a small chain of hair salons in Singapore. Recently I have been looking into foreign property investment as well and my research tells me that Australia is the best place, especially for Singaporeans due to our trade agreements already in place and the proximity of our countries.

I was thinking of taking some time off in Jan to look around for a good place to invest in. I’m thinking I will buy a few units and rent it out. My children are also almost 18 and they might go to uni in Australia and then they could live in that apartment.

My question to you is do I really need a mortgage broker to get a home loan from an Australian bank? Can I not just meet with the bank when I come over?

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Otto Dargan
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Re: Do I need FIRB approval to buy a house in Australia?

Post by Otto Dargan »

Hi Cindy Woo,

While applying for mortgages in Australia does not necessarily required the use of a mortgage broker, consider the following:
  • Most mortgage brokers in Australia will not charge you for using their services
  • A local broker will be able to negotiate a better deal for you
  • A local broker will know which lender you should apply with, which is important considering the fact that most lenders do not handle non-residents
  • You might not be familiar with local laws and regulations in regards to mortgages however a broker will know these and will advise you accordingly
These are just some of the benefits of using a local mortgage broker. Even if you come to Australia remember that there are more than 300 banks – which one will you apply for a home loan with?

All lenders will also have their own set of lending guidelines which means that they will assess your situation differently. Some might let you borrow more, some might only finance properties in a certain area while another might not offer 24/7 services.

Did you know that you can even hire a buyer’s agent in case you cannot visit Australia?

Cheers,
Otto
Otto Dargan
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P | 1300 889 743
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andylau
Posts: 35
Joined: Thu Jun 20, 2013 7:13 pm

Re: Do I need FIRB approval to buy a house in Australia?

Post by andylau »

Yes Otto that’s pretty helpful. Is there any reason why the FIRB does this?

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Otto Dargan
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Re: Do I need FIRB approval to buy a house in Australia?

Post by Otto Dargan »

Hi andylau, the FIRB is the Foreign Investment Review Board. It is a governmental organisation that monitors all purchases made by foreigners for Australia real estate.

The reason this is done is to regulate the market and to make sure that every purchase will benefit the Australian economy by restricting investors to new properties only. More importantly it is also to ensure that the real estate market is stable and housing prices do not fluctuate.

Cheers,
Otto
Otto Dargan
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P | 1300 889 743
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Cindy Woo
Posts: 47
Joined: Thu Jun 27, 2013 4:47 pm

Re: Do I need FIRB approval to buy a house in Australia?

Post by Cindy Woo »

Wow that is overwhelming.. but if you aren’t charging for your services, then it seems like a no brainer to get a mortgage broker! Could you please tell me more about the buyer’s agent? Is it like someone who will buy the property in your stead?

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Otto Dargan
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Re: Do I need FIRB approval to buy a house in Australia?

Post by Otto Dargan »

Cindy Woo, a buyer’s agent works for you to find and negotiate a property deal for you by researching the market and meeting with real estate agents. Some of these agents will charge you a service fee and / or a percentage of the property value. If you do hire one, make sure that they are licensed and work in the same state that you want to buy a property in.

Furthermore you can also hire an accountant to handle your taxes and advise you on how you can save more. They are also helpful in case you are setting up a new company in Australia or a trust.

It is advisable for investors new to the Australian market to read about the home loan process for foreigners so that they are familiar with the terms and costs associated with buying a property.

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

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