Are you an overseas buyer looking to purchase a property in Australia?
If you’re a non resident looking to take out and Australian mortgage on a property, then banks will require you to prove your overseas income.
How can I declare my foreign income?
Most lenders will require that documents be written in English.
If your financial documents are written in a foreign language then you may need an interpreter’s certificate.
An interpreter’s certificate is an official document that translates the original financial document to English and has been certified.
You financial documents need to be translated by a recognised organisation that has the authority to do so. These can include approved translators within Australia or a qualified translator that lives overseas.
Ideally, you can get your get an interpreters certificate from your local Australian consulate. The staff will be able to identify your documents and translate everything for you.
However, some of our lenders have special teams that can assess foreign language documents.
Our mortgage broker are also able to organise an authorise translator to translate your documents.
How do lenders assess foreign documents?
Once everything is translated to English then the lender can assess the translated documents. Once the documents have been certified the lenders do not need the original non-English documents.
Some countries don’t have annual leave. This will vary slightly on how your proof of income is assessed. If a basic tax system is in place, it won’t impact the assessment too much. In most cases, payslips from first world countries will be acceptable to the banks.
Some countries have tax returns that are infrequent or can’t be readily understood by Australian banks to be accepted as proof of your income. Some of our lenders will accept an accountant’s letter for self-employed applicants.
What documents can Australian banks assess?
Each bank has its own policies regarding proof of income from overseas when applying for an Australian mortgage. For example, if the person is self-employed some banks won’t require tax returns. If the banks do require tax returns then they’ll need to be certified.
If you have a job then payslips may or may not meet the standards required by Australian banks to be accepted as proof of your income. If this is the case, there are other documents that can be provide as proof of income.
Policies will also vary depending on your type of employment. If you work for someone else, you may be required to provide one or two of the following:
- A letter from your employer,
- A copy of your employment contract,
- Two payslips,
- Three months of bank statements showing your salary being deposited into your account, OR
- Tax returns for the last financial year.
If you’re self-employed, the documents you’ll need to provide will differ. These documents could include:
- Two years of tax returns or,
- An accountant’s verification letter if your tax returns are unavailable.
What you’ll need to provide will depend on which lender you choose to go with.
If you can’t provide either of these documents, or you wish to find out more information on please call us on our international number +61 2 9194 1700 or enquire online and one of our specialist mortgage brokers will be able to help you.
Can they verify my income using a bank feed?
Some fintech companies such as Mogo Bank Connect, Yodlee and Bankstatements.com allow a financial institution to log into your bank account and scrape your financial data such as your income, expenses and account details.
While we as a mortgage broker have agreements with some companies like this, there are yet to be any Australian banks which will use their method of income verification for a foreign income source.
What if I don’t pay tax?
Some countries, such as Abu Dhabi and Dubai have no tax system. Payslips from these countries will show no tax. In Australia, that could prove to be an issue with some lenders.
In most cases, we take the payslips from those countries and apply the Australian tax system when assessing your income documents.
Other countries that have an existing tax system in place are fine.
How do banks assess foreign income?
Banks will often assess your base income by converting it to Australian dollars, and then reduce it by 10% as a buffer for any currency fluctuations. Some lenders will only use 80% of your income to allow for exchange rate fluctuations.
What about commission and overtime?
In 2016, the Australian Prudential Regulation Authority (APRA) instructed Australian banks to put limits on their use of certain income types when assessing a home loan application.
Some income types such as overtime, commission, bonus, allowances or other non-base income types are ‘shaded’ by 20% or more when a bank calculates how much you can afford to borrow. In the case of Australian expats or foreign investors, it’s sometimes ignored entirely!
The good news is that some lenders aren’t regulated by APRA and so have their own policies, which allow them to accept these income types.
Will banks ignore my foreign partner’s income?
In order to improve your borrowing power, it’s better if the bank uses both you and your partner’s income.
Unfortunately, most banks won’t consider your partner’s income if they’re not an Australian citizen or permanent resident (PR).
However, we have been able to get exceptions to policy for strong cases.
Here’s what the bank is looking for:
- Your partner has a valid temporary visa for Australia (see the temporary visa mortgage page for a list of acceptable visas).
- Your partner is living in Australia or has family ties to Australia.
- You and your partner have children together
- You’re married or have been in a defacto relationship for over two years.
- You’re an Australian citizen or PR holder and you’re the main income earner.
Please call us on 1300 889 743 or fill in our free online enquiry form to discover if we can get you approved as an exception to policy.
How is my debt assessed?
Assessment of your foreign debts is often at Australian interest rates, which are often much higher than the rates that you’re paying in your country.
Other lenders will take the investment repayments on face value which means your repayments will be viewed as being lower. However, some of these lenders may not be susceptible to overseas income.
If you’re paying rent, some lenders will take it into account. Most of the time, the rent that you’re paying can show that you can cover the debts that you’re paying off. It’s always a good idea to provide rental statements with your current debts, because that will help to reduce any negative scoring due to debt.
To find out which lenders will accept your overseas income call one of our specialist broker on +61 2 9194 1700 or enquire online.
What countries aren’t accepted by the banks?
There’s a set list of countries that banks will deal with and some countries that banks won’t deal with due to known issues regarding tax.
Other countries may be subject to a trade embargo. As a result, borrowers from these countries aren’t eligible for any loan from Australia.
The best way to find out if your country, personal debts and income are acceptable to the banks is to contact a mortgage broker.
How can I get a mortgage in Australia?
The majority of lenders will not deal with people from overseas. Our mortgage brokers know which banks can do lend overseas and which lenders will provide the best loan for your circumstances.
If you’re calling internationally, contact us on +61 2 9194 1700 or enquire online to speak to one of our expert mortgage brokers.
You can also simply post your comment or question below and one of our experts will reply as soon as possible.