Current status of foreign investment in Australia

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orru
Posts: 8
Joined: Mon Mar 16, 2015 6:34 pm

Current status of foreign investment in Australia

Post by orru »

Hi everyone,

I’m a Hawaiian citizen planning on investing in Australian property. My friends have told me that investing in Australian property is a wise decision. I looked into it and I’ve found out that it’s quite true.

I’ve never invested in overseas property before so I’m not sure about foreign policies, especially the ones that exist all the way out in Australia. However, it has come to my attention, through a friend who’s currently living in Australia, that the policies regarding foreign investment are getting stricter.

What’s the current status of foreign investment there? What are the major changes or important legislation that I must know?

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Otto Dargan
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Re: Current status of foreign investment in Australia

Post by Otto Dargan »

Hello orru, welcome to the forums.

As a foreigner, if you’re planning on investing in Australian property, you’ll likely have to watch out for tough new penalties. Federal Treasurer Joe Hockey recently introduced new tough laws for foreign investment in Australian property, which may not bode well for some investors.

For example, if your breach any of the Foreign Investment Review Board (FIRB) rules, you may have to face up to 3 years’ imprisonment or upwards of $130,000 in penalties! The FIRB is the regulatory body which assesses applications from foreigners who’d like to invest in or buy a home here in Australia.

You may also have to pay a $5,000 ‘application fee’ to buy a property under $1 million and $10,000 for every million dollars in the purchase price. However, this may not be a huge issue because the Australian dollar is dropped right now so the real estate here is discounted.

Please note that this may only apply for foreign investment proposals after 1 December 2015.

The main thing you need to know right now is that your foreign investment proposal will now be overseen by the Australian Taxation Office (ATO). The ATO will also look over the collection of fees, upfront screening processes as well as the enforcement of the rules of the FIRB.

Cheers,
Otto
Otto Dargan
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orru
Posts: 8
Joined: Mon Mar 16, 2015 6:34 pm

Re: Current status of foreign investment in Australia

Post by orru »

Hi Otto,

Thanks for the swift reply. So what you’re saying is that I’ll probably have to go through a more strict screening process for my investment proposal to qualify, right? I’ve got a good income and a few properties in my portfolio so I think I can make it past the screening process.

I was thinking of taking out a mortgage from one of the banks here but what if I want to take out a mortgage in Australia itself? Is there any option to do that?

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Otto Dargan
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Re: Current status of foreign investment in Australia

Post by Otto Dargan »

Hi orru,

Yes, if you want to take out a mortgage here in Australia itself, you can take out a foreigner home loan. As you’re a foreign citizen living outside of Australia, you may borrow only up to 80% of the property value.

However, if you can’t prove your income, you may borrow only up to 75% of the property value. Whatever the amount, you’ll need an approval from the FIRB first.

What’s great is that some lenders may offer you the same competitive professional packages as well as basic loan discounts that Australian citizens get.

If you’d like to know more about this, you can have a look at our website. You can also speak with one of our credit specialists directly by calling us on 1300 889 743 if you’re in Australia (+61 2 9194 1700 from outside of Australia) or you can fill in our free assessment form and one of us will contact you within 24 hours.

Cheers,
Otto
Otto Dargan
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P | 1300 889 743
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orru
Posts: 8
Joined: Mon Mar 16, 2015 6:34 pm

Re: Current status of foreign investment in Australia

Post by orru »

Thanks, Otto. That foreigner mortgage sounds good. I’ll be calling your office by the end of the week to discuss rates and everything else I may need to know to get such a mortgage.

You’ve been a great help to me and so has your amazing website. Thanks for all these lovely resources you’ve provided. I’ve already told my friends about you guys. Thanks again and talk to you soon.

daggy
Posts: 9
Joined: Tue Mar 17, 2015 7:45 pm

Re: Current status of foreign investment in Australia

Post by daggy »

Hi guys,

I grew up in Dalby but my whole family moved to Spain before I completed school. Now that I’ve completed college and have saved a good amount of money, I’m thinking of moving back to Australia. I want to buy a house soon and maybe rent it out or something before I actually make the move.

Is there any way that I can borrow 80% of the property value or possibly more to buy a house in Australia?

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Otto Dargan
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Re: Current status of foreign investment in Australia

Post by Otto Dargan »

Hi daggy,

Even if you’re an Australian living overseas (expat), you may still be able to apply for an Australian mortgage.

You may be able to borrow up to:
  • 80% of the property value as long as you’re able to provide basic evidence of your income using documents such as payslips.
  • 95% of the property value if you can prove that you’re in a good financial position and that your employment is stable. You may be able to borrow up to 90% or even 95% but please note that you’ll likely have to pay Lenders Mortgage Insurance (LMI).
LMI is a one off fee charged by the lender when borrowing more than 80% of the property value and it protects the lender in case you’re unable to make the repayments.

If you want to learn more then you can browse through our website or call our office.

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

daggy
Posts: 9
Joined: Tue Mar 17, 2015 7:45 pm

Re: Current status of foreign investment in Australia

Post by daggy »

Thanks. This has really been very helpful. I’m pretty sure I can qualify for the 90-95% mortgage because I know that I can provide complete income evidence of a strong and stable financial situation. I’ll give you a call by the end of the day or possibly tomorrow to discuss things in detail. Bye :)

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