Help me figure out how Australian lenders will assess my foreign income

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Zheng
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Joined: Fri May 03, 2019 11:50 am

Help me figure out how Australian lenders will assess my foreign income

Postby Zheng » Fri May 03, 2019 11:51 am

Hi, I’m Singaporean looking to invest somewhere along the coast in Victoria. I’m a data scientist earning 80k SD a year and my wife earns 100k SD a year. I’m trying to figure out how Australian lenders will calculate the serviceability on our foreign income? In essence, I want to know how much can I borrow for an investment property?

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Otto Dargan
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Re: Help me figure out how Australian lenders will assess my foreign income

Postby Otto Dargan » Fri May 03, 2019 12:33 pm

Hello Zheng. Welcome to the forums.

For non-resident foreign investors, calculating the serviceability can be a real challenge. You need to take into account:
  • Currency: Singaporean dollar (SGD) is one of the preferred currencies accepted by Australian banks and lenders.
  • Income shading: Different lenders have different percentages of the overseas income they’re willing to use for serviceability. Most lenders use between 60% to 90% of your overseas income.
  • Australian tax rates: Australian tax rates apply even if you’re living in a country with low or no income tax (some exceptions).
  • Stronger serviceability requirements: Lenders use loaded repayments on foreign loans. That means for any foreign debts you may have they will assess it using a higher interest rate than the one you’re paying. Lenders generally ignore foreign rental income.
  • No negative gearing benefits: Negative gearing benefits are ignored for an investor who is overseas.
    80-85% of the rental income from the property you’re buying.

You can use our borrowing power calculator to get an estimate of your borrowing power.

Our mortgage brokers specialise in foreigner mortgage.
Give us a call on 1300 889 743 or fill in our free assessment form to find out how much you can borrow with a non-resident home loan.

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

Zheng
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Joined: Fri May 03, 2019 11:50 am

Re: Help me figure out how Australian lenders will assess my foreign income

Postby Zheng » Fri May 03, 2019 1:30 pm

As a foreign citizen, we would need to get FIRB approval that much is clear. Can you give me an estimate of the time frame and the fees involved?

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Otto Dargan
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Re: Help me figure out how Australian lenders will assess my foreign income

Postby Otto Dargan » Fri May 03, 2019 2:05 pm

Hi Zheng,

Yes, the Foreign Investment Review Board (FIRB) approval is required for foreign nationals buying property in Australia. For foreign investors the investment property must be a new property or vacant land to build a new property, you can’t buy an established dwelling.

As for the approval, as long as you abide by FIRB guidelines and restrictions, it is just a formality to apply and get approved. The fees can vary depending on the value of the residential property or land that you want to purchase:
  • $1 million or less: $5,600
  • $1 million to $1,999,999: $11,300
  • $2 million to $2,999,999: $22,700
  • $3 million to $3,999,999: $34,000
  • $4 million to $4,999,999: $45,400
  • $5 million to $5,999,999: $56,700

Fees are tiered per million, for more information about the fees, you can refer to the official FIRB application page.

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

Zheng
Posts: 3
Joined: Fri May 03, 2019 11:50 am

Re: Help me figure out how Australian lenders will assess my foreign income

Postby Zheng » Fri May 03, 2019 2:48 pm

Okay, great. The stamp duty for a foreigner purchasing here in Singapore is around 20%. What’s the equivalent stamp duty surcharge in Australia specifically in Victoria?

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Otto Dargan
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Re: Help me figure out how Australian lenders will assess my foreign income

Postby Otto Dargan » Fri May 03, 2019 3:03 pm

Hi Zheng,

The foreign stamp duty surcharge for a $1 million property for a foreign investor purchasing in Victoria (VIC) would be $125,000.

There is also a “ghost tax” or absentee owner surcharge on land tax of 1.5% starting from 1 January 2017. This is an annual fee that’s applied when foreign owners of residential dwellings fail to rent out or residentially occupy their property for more than six months each year.

Give us a call on 1300 889 743 or fill in our free assessment form to discuss your situation.

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


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