Refinancing an existing mortgage for non-residents can often be challenging. However, there are lenders that specialise in this space who may be able to help you.
It all comes down to your visa status, country of residence, and the currency you’re earning.
How do I improve my chances of approval?
You should first understand that lending policy for non-resident mortgages varies from bank to bank.
When you’re refinancing a home loan in Australia, you need to meet certain criteria:
- If you’re accessing equity, you should have less than 80% owing on your home loan.
- Make sure your residing country has tax legislation that makes investing in Australia feasible.
- Your income must be in an acceptable currency.
- If you’re a temporary resident or a foreign investor, you need approval from the Foreign Investment Review Board (FIRB).
- Only specialist lenders deal with non-resident refinancing.
Would you like help to apply for refinancing in Australia?
Give us a call on 1300 889 743 (+61 2 9194 1700 from outside of Australia) or complete our free assessment form to get in touch with one of our specialist mortgage brokers.
Are you earning foreign currency?
Calculating the serviceability can be a real challenge for non-resident foreign investors, especially if you are earning a foreign currency.
You need to take into account:
- Preferred currencies by lenders. A few specialist lenders may also lend for other currencies, but you may need to provide a larger deposit and pay a higher interest rate.
- Income shading: Most lenders use between 60% to 90% of your overseas income for serviceability. However, this may vary from lender to lender.
- Australian tax rates may apply. With some exceptions, Australian tax rates apply even if you’re living in a country with no or low income tax.
- Serviceability at a higher interest rate: Most lenders assess any foreign debts using a higher interest rate than the one you’re paying. Moreover, they tend to ignore foreign rental income.
- No negative gearing benefits: Lenders usually ignore negative gearing benefits for investors who are overseas.
Some lenders will only use 80% of your foreign income after converting it to Australian dollars to account for exchange rate fluctuations.
We have a borrowing power calculator that you can use to get an estimate of your borrowing power.
How can I prove my income?
Australian lenders require non-residents opting to buy or refinance in Australia to prove their overseas income.
Each bank has its own policies in regards to proving foreign income. Moreover, these policies vary depending on your type of employment.
The first thing on the checklist is to translate documents in English as that’s what most lenders in our panel require.
If you’re a PAYG employee, you may be required to provide one or two of the following documents:
- A letter from your employer,
- Copy of your employment contract,
- Two payslips,
- Three months of bank statements that reflect salary deposits, OR
- Tax returns for the last financial year.
Self-employed borrowers may need to provide additional documents.
These will vary depending on which lender you choose to go with, however, they could include:
- Two years of tax returns or,
- An accountant’s verification letter if your tax returns are unavailable.
Most lenders will decline applications from borrowers that have a foreign pension as their sole source of income. This may only work on an exceptional basis but chances are low for non-resident applicants.
Note that Australian lenders take in 100% of all foreign liabilities while assessing your application.
Refinancing your loan from overseas
Refinancing as a non-resident can be tough as only a handful of lenders deal in this space.
- Make sure you have all the necessary documents ready to prove your income.
- Check out the best available Australian interest rates for foreign investors.
- Most lenders will require you to be identified at an Australian consulate.
- Some lenders may also require you to have a mailing address in Australia. An alternative to this is to have someone who holds a Power of Attorney (POA) and resides in Australia.
Note that some lenders will need more documents and time to process your application.
Give us a call on 1300 889 743 (+61 2 9194 1700 from outside of Australia) or complete our free assessment form to check with one of our specialist mortgage brokers.
Refinancing a property as an Aussie expat
If you’re refinancing as an Aussie expat there are similar hurdles to overcome as you earn in a foreign currency. However, you may be able to borrow up to 90% of the property value.
- If you’re self-employed, chances are you could borrow up to 80% of the property value.
- Lenders may reduce the loan amount depending on your country of residence, the currency you’re earning, and your visa status.
- Only a few lenders will assess your income using the tax rate of the country that you’re living in. Since Australian tax rates are some of the highest in the world, income assessment using foreign tax rate allows you to borrow more.
- Australian expats are exempt from foreigner stamp duty surcharge. However, it’s best to double-check with your relevant state revenue office.
For more information, you can visit our page on Aussie expat home loans.
Are you a temporary resident?
If you’re a temporary resident, the amount you can borrow while refinancing in Australia depends on your visa type.
Certain lenders restrict the loan amount for non-residents on a case by case basis. Check out the list of accepted visa types that Australian lenders consider “non-residents”.
Banks tend to see your application as a lower risk if you’re married to or in a relationship with an Australian citizen, NZ citizen or Australian permanent resident.
Visit our page on spouse visa mortgage for more information.
Refinancing an investment property
Most non-resident borrowers tend to refinance to access equity. It allows them to use the funds to invest in Australian property and build a portfolio.
- Refinancing costs for investment property may vary even if you’re switching to get a better interest rate.
- If you’re planning to refinance multiple properties under the same investment loan, consider the benefits of separate loan facilities rather than continuing to cross-collateralise.
- You can maximise your negative gearing benefits. It is recommended that you speak to a tax professional in regards to tax deductions and depreciation benefits.
- You can opt to go for an offset account facility. If you have the equity in an offset account, you can easily access these funds to make extra repayments or invest further.
Are you a NZ citizen?
- NZ citizens living in Australia can qualify for the same interest rates as Australian citizens.
- NZ citizens residing outside of Australia can get approval from lenders on a case by case basis, often at a higher interest rate.
- In some cases, NZ citizens are exempt from the foreign stamp duty surcharge.
To learn more about NZ citizens’ criteria, visit our page on New Zealand citizen mortgage.
Which lender can help me?
It is critical that you apply with the right lender! There are only a handful of specialist lenders or banks that deal with non-resident borrowers.
Our experienced mortgage brokers can help assess your application and submit it with a lender that will approve it the first time round.
Please call us on 1300 889 743 (+61 2 9194 1700 from outside of Australia) or enquire online to speak with one of our mortgage brokers to discuss your refinancing options.
Do I need the approval of the Australian Government?
Foreign investors may need approval from the FIRB to invest or buy a home in Australia.
However, you won’t need FIRB approval in the following cases:
- You’re an Australian expat living overseas.
- You’re a foreign national with a permanent residency visa.
- You’re a NZ citizen.
- You’re refinancing as joint tenants and are in a spousal relationship. In this case, you have to be on a temporary visa such as spouse visa, 457 work visa, or student visa.
Learn more about FIRB application fees and your eligibility for FIRB approval by visiting our page on FIRB approval.
Refinance as a non-resident today
If you’re planning to refinance property in Australia, we can help! Refinancing as a non-resident can be quite tricky and confusing.
Since not many lenders deal in this space, our specialist mortgage brokers can guide you through the process and offer you the best options.
Call us on 1300 889 743 (+61 2 9194 1700 from outside of Australia) or complete our free assessment form to discover the best refinance options for you.