What are the foreign currency loan requirements?

Any foreign currency loan must adhere to all standard Australian lending criteria including proof of income, serviceability and Loan to Value Ratio (LVR).

On top of these requirements, there are number of measures that overseas buyers also need to conform to.

  • The currency of the loan must match the currency of your income.
  • Real estate used as security for an Australian home loan must also be situated in Australia.
  • Foreign investors require Foreign Investment Review Board (FIRB) approval.

Can I borrow in a different currency?

Australian lenders require that the currency of the home loan must match the currency of your income.

If you are in the USA and buying a property in Australia then you can have a loan in United States Dollars (USD) but not in Euros.

Some lenders will require you to have a banking relationship with them in both the United States and Australia.

Typically this is for overseas investors buying a property in Australia.

How much can I borrow?

When applying for a foreign currency mortgage, you can only borrow a maximum of 60% of the property value.

There is no limit to how much you can borrow, so long as it remains below 60% LVR (Loan to Value Ratio), and meets all other standard lending criteria.

As an Australian citizen living overseas you may be able to borrow 95% of the property value with an Australian dollar (AUD) home loan. If you are a foreign investor you may be eligible to borrow up to 80% of the property value with an AUD loan.

Our mortgage brokers are experts in Australian home loans. If you are interested in finding out whether you are eligible for a mortgage, call one of our brokers today on our international number +61 2 9194 1700 or enquire online.


How will the exchange rate affect my home loan?

If there is a significant currency movement then you may need to provide additional security or pay down the loan. This ensures that the bank’s security position remains within acceptable guidelines.

For example, if a loan is $900,000 US and the property is worth $1,500,000 AU$ and the exchange rate is 1:1 then the LVR is 60%. In other words you have borrowed 60% of the value of the property.

However, if the AU$ drops so that each AU$ only buys 80 cents US then the LVR has changed. The loan in AU$ equivalent is now $1,125,000 on a property worth $1,500,000. The LVR is now 75%, which would not be acceptable to the bank for a foreign currency mortgage.

The bank would ask the borrower to either provide an additional real estate in Australia as security for the loan or to make a lump sum payment off of the loan to bring it back down to $900,000 AU$ equivalent.

In many cases, people would not have the extra money available so they would need to sell their property or refinance their mortgage.

We recommend that you seek independent financial advice before using Australian real estate as security for a mortgage in a foreign currency.

Alternatively, a less risky approach is to borrow in Australian dollars instead. This will also allow you to borrow more against the value of your property.


Which foreign currencies can I borrow in?

There are a number of currencies that you are able to borrow in. These include (but are not limited to):

  • Danish Kroner (DKK)
  • European Union Euro (EUR)
  • Great British Pound Sterling(GBP)
  • Hong Kong Dollar (HKD)
  • Japanese Yen (JPY)
  • New Zealand Dollar (NZD)
  • Norwegian Krone (NOK)
  • Swedish Kroner (SEK)
  • Singaporean Dollar (SGD)
  • Swiss Franc (CHF)
  • United States Dollar (USD)

You may still be able to qualify for a mortgage if you earn an income in a currency other than the list above. Bear in mind that restrictions and conditions may apply, such as your borrowing limit being capped at 80% of the property value (Loan To Value Ratio):

  • Bahrain Dinar (BHD)
  • Brazilian Real (BRL)
  • Bruneian Dollar (BRN)
  • Chinese Yuan (CNY)
  • Indian Rupee (INR)
  • Indonesian Rupiah (IDR)
  • Omani Rial (OMR)
  • Macau Pataca (MOP)
  • Malaysian Ringgit (MYR)
  • Mexican Peso (MXN)
  • Oman Rial (OMR)
  • Papua New Guinean Kina (PGK)
  • Philippine Peso (PHP)
  • Qatari Riyal (QAR)
  • Samoan Tala (WST)
  • Saudi Arabian Riyal (SAR)
  • Solomon Island Dollar (SBD)
  • South Korean Won (KRW)
  • South African Rand (ZAR)
  • Sri Lankan Rupee (LKR)
  • Taiwan New Dollar (TWD)
  • Thai Baht (THB)
  • Tongan Pa’anga (TOP)
  • Turkish Lira (TRY).
  • United Arab Emirates Dirham (AED)
  • Vanuatu Vatu (VUV)
  • Vietnamese Dong (VND)

It’s important to keep in mind that investment policy changes on a regular basis including which currencies lenders will accept for the purposes of expats and foreign investors wanting to purchase property in Australia.


Which countries are eligible for a loan?

Foreign investors from most countries should be eligible for a foreign currency loan so long as they meet the lenders requirements. Note that although your country may be accepted, it is unlikely you will be able to borrow in your local currency. In these cases most people choose a loan in either US or Australian Dollars.

There are some countries that may not be considered due to known issues regarding tax.

Other countries may be subject to a trade embargo. As a result, borrowers from these countries are not eligible for any loan from Australia.


Can I borrow in Australia using my foreign real estate?

Unfortunately we cannot help you to obtain a loan in Australia using an overseas property as security. You will need to contact a lender in the country that your property is in, borrow in that country and then bring the funds to Australia.

You can use these funds from an overseas mortgage as a deposit on a property in Australia; however many Australian banks do not accept this method of financing your deposit.


What does APRA think about foreign currency?

The Australian Prudential Regulation Authority (APRA) doesn’t like the idea of foreign currency mortgages.

Although it hasn’t banned them outright, its prudential practices guide (PPG) states that banks face significant challenges when validating offshore income streams.

As good practice, APRA also said it would best for banks to discount offshore income when assessing a borrower’s capacity to borrow.

Most banks have taken this advice on board and stopped lending to foreigners altogether.

Luckily, some other lenders have taken a measured approach and simply limited borrowing limits and their list of acceptable currencies in order to mitigate this risk.

We know who these lenders are!


Apply for a mortgage

To find out whether you are eligible for a home loan in Australia, contact one of our knowledgeable mortgage brokers via our international number +61 2 9194 1700 or enquire online.

  • AC Monk

    Hey, what about Australian citizen who are living overseas? Will we be assessed the same way as foreign investors and be limited to 60% on a foreign currency mortgage?

  • Hi AC Monk,

    Australian expats living overseas won’t generally be assessed as foreign investors unless you’re unable to provide sufficient financial documents that can prove your foreign income. This means that you may be able to borrow up to 95% of the property value even if you may be earning an income in a currency other than the Australian dollar. Please check out the Australian expat mortgages page for more info:
    https://www.homeloanexperts.com.au/overseas-australian-mortgage/

  • Rupasingha

    I’m from Sri Lanka and want to invest in Australian property market. But our currency is not on the list who can buy the property in Australia, are there some other lenders beside these that accept Sri Lankan LKR?

  • Hi Rupasingha,

    Due to recent policy changes and restrictions on foreign investment in Australian property market, most of the lenders have pulled out or have very strict guidelines on lending to foreign investors. However, there are options available. Based on your currency the lenders could potentially lend you 40-60% of the property value depending on your overall situation.

  • Patricia

    Can an American company borrows funds from a US bank to buy property in Australia or does it need to use an Australian Bank? Do you partner with any US banks? Thank you

  • Hi Patricia,
    We’re not aware of any banks in the USA that will accept an Australian property as security. So if you borrow from a USA bank you’d need to use a property you have there as security or if you are a large business then seek a large unsecured facility.

    Australian banks have restrictive policies for foreign investors however we are still able to finance investors in the USA as long as they have a good income and large down payment (deposit).

  • brad

    Hello,
    I am wondering whether it is possible to buy colombian real estate in Colombian Peso with AUD loan money? I currently have significant property in Australia with very good equity build up. When I moved to Colombia 2years ago the major bank put me on investment loan rates of 4.39%. Loans are principal and interest. I also hold lines of credit (not drawn down) with a major Australian bank of about $550KAUD. They are sitting there. I was wondering whether

    you would advise drawing down around 170KAUD at 5.5%p.a line of credit rate to purchase property in Bogota. I am not sure whether I would disclose to the Australian Bank the loan purposes. This could be viewed as expenditure or maintenance of current australian property holdings. Happy to hear of alternatives or recommendations.

  • Hi Brad,

    Thanks for posting. I hope you are enjoying Columbia.

    If you’re an Australian citizen or PR holder then yes we can easily refinance your current home loan and release cash out to buy property in Columbia. 5.5% is very expensive and I expect we can get you a much better rate.

    Some lenders would not allow the funds to be used to buy a property overseas, whereas others would be fine with this.

    Just be careful as you have exchange rate risk. What I mean by that is that your repayments are in AUD but your income may be in another currency. The last customer we helped in Columbia has an income in USD. So having a healthy buffer of spare funds in Australia is advisable esp if your income is in a less stable currency than USD or AUD. Please enquire on our website and one of our expat specialists will contact you to assist. https://www.homeloanexperts.com.au/free-quote/

  • brad

    Hello, I hold Australian Passport but would not I believe be an Australian Resident as Classified by ATO purposes. I reside overseas. So would this affect my ability for loan from established equity in existing Australian Property Assets to then buy a Foreign property in Bogota Colombia?
    Thanks for your reply. I understand the concept of Foreign Exchange Risk. I would have AUD$$ buffer and definitely a lot of Equity buffer in AUD because existing equity in property assets in high.
    I earn in Colombian Peso and not USD or AUD.
    I earn a little EUR.
    How many lenders would be fine with this? I would have to work out the regular mortgage transfer for loans grants in peso to AUD that was economic and to not be slammed but FX fees and charges._ Would such a rate be better than 5.5% (line of credit rate). My Property assets as investor currently have loans at 4.4% rates.
    Would the banks just need to have security over the Australian Assets still *not the new overseas asset if there is more than sufficient equity in the existing Australian assets?

    Thanks for your answers in advance.
    Brad

  • Hi Brad,
    Yes as an Australian passport holder it’s ok if you are not an Australian resident for tax purposes. https://www.homeloanexperts.com.au/overseas-australian-mortgage/
    Yes we can likely accept your Columbian Peso income as long as your loan is no more than 70% or 80% of the value of your Australian property.
    No the banks would not require your property in Columbia to be security for your loan. Best to approach a bank in Columbia if you want to use that as security to borrow more.
    Please contact us if you’d like our assistance. https://www.homeloanexperts.com.au/free-quote/

  • Vix189

    Hello.
    My husband and I are British Citizens with Australian PR living in Aus. We are looking to purchase property in Australia and are wondering if we should borrow money against our UK property (offset mortgage) and bring it in to the country that way (as AUD). As interest rates in the UK are low and we are on a fixed rate, this would be viable for us, however we are unsure as to whether this would be an option and if so, how much would we be able to put towards the property?
    Many thanks
    Victoria

  • Hi Victoria,
    You can borrow up to 95% of the value of an Australian property. However borrowing 80% is cheaper as you avoid LMI https://www.homeloanexperts.com.au/lenders-mortgage-insurance/
    Borrowing in the UK is an option if a UK lender will allow you to. Their rates are lower however then there is the additional risk of exchange rate movements. In most cases people choose to borrow a deposit offshore and then borrow the bulk of the funds in Australia.
    We can’t assist with loans in the UK, we can with your loan in Australia. Please contact us if you’d like our help https://www.homeloanexperts.com.au/free-quote/

  • penny

    I’m a 457 visa holder and I’ll be applying for PR soon. I would like to borrow 90% to buy a house here but I’m paid in USD in an American account and when I applied with a bank earlier, I was rejected. Any solutions?

  • Hey penny,
    You may need to talk to your employer about being paid into an Australian account. Once this is done, an employment letter that confirms in AUD the amount that you’re being paid into the Australian account can help verify your income properly. If you’d like to speak with a temporary resident home loan specialist and discuss your situation and loan needs in detail so we can get you a list of recommended lenders, you can call 1300 889 743.

  • StevenU

    My wife is Norwegian but I’m Aussie. We work for an internation firm and earn in Euros. We’d like to buy an investment property so can 80% finance be available to us?

  • Yes, we can help you borrow 80% to buy an investment property. Since Euros are a currency that’s commonly dealt by the lenders here in Australia, it shouldn’t be a problem to have it accepted. You can call 1300 889 743 to discuss this with a foreign currency home loan specialist or simply make an online enquiry:
    https://www.homeloanexperts.com.au/free-quote/

  • Rts

    I’m the director of a flight centre in Canada and I earn CAD 350,000 a year. I have dual citizenship of Canada and NZ. I want to cash out to buy another property in Australia and get a low rate. Please suggest if you can help.

  • Hi
    We may be able to help you with this but we’ll need more information to properly assess your situation and loan requirements. Please call our overseas number +61 2 9194 1700 to discuss things in detail with one of our non-resident mortgage specialists.

  • Brow

    I will be going for my first home loan by the end of 2017 and I love that you can get a mortgage with foreign income here. I earn in Euros and I found out this is well accepted so that’s great too. I’m only researching for now so I’d like to know if it will be better to make my mortgage repayments weekly, fortnightly or monthly to pay it off sooner.

  • Hey Brow,
    Actually, there is no substantial benefit to paying weekly or fortnightly as opposed to making monthly repayments. This is because you’re only making 2 extra repayments if you’re paying fortnightly (26 fortnights in a year) or 4 in the case of weekly (52 weeks) as opposed to 12 on monthly mortgage repayments. However, making monthly repayments and paying more than the minimum is the most effective way to save money on your mortgage. If this is combined with an offset account you can easily reduce your interest expense without making a noticeable change to your lifestyle.

  • Shaz

    Hello,
    I am an Aussie and my husband is from Botswana, both currently residing in Berlin due to my husband’s work. However, being paid in BWP (Botswana Pula). We have been declined financing by the banks as they do not accept Botswana currency. FIRB claims that we do not need approval as I am Australian (exemption conditions). I was wondering if we would have a chance of securing financing with your company? We are in the process of purchasing our first home in Australia (which we will list as a rental, until our return to Aus). Looking forward to your response.

  • Hi Shaz,
    This is is a challenge as due to the currency that your husband is paid in and that he is not an Australian. It’s possible that we could get you approved but it would likely be either just relying on your income in which case your borrowing power may be limited OR if we need your husband’s income as well then it may be with a foreign investor lender which charges around 8%. Would either of these options work for you? Or is it possible for your husband to request to be paid in Euro instead?