Depending on the outcome of the July 2 election, time may be running out for negative gearing property in Australia. If you want to invest in property in Australia before any tax benefits are reduced, then this article will help address one of the most important aspects of property investment – finance. So how can Australian Expats Finance Property In Australia?
Is It Possible To Finance Property in Australia when Living Abroad?
Yes it is possible to finance property in Australia while living abroad. As with any credit application, there are a number of factors that banks consider when assessing your loan application including employment history, your country of residence, the type of work visa you hold, the currency you are earning, and income. As an Australian Expat you will be considered a non-standard borrower and different criteria may be applied to assess whether you meet the bank’s lending criteria. As a result, in some cases the thresholds for obtaining a loan may be more difficult, or you may need to provide a higher deposit than if you were living in Australia. The banks have been tightening their lending rules in 2016, and this article covers these changes in more detail.
Financing your property in Australia, in my opinion, is the most important part of the property investment process. Unfortunately, most investors pay little attention to it, or only consider it once they have signed a contract to purchase a property. For Australians living abroad, how you finance your property in Australia is even more important. The rules relating to lending to Australian Expats with foreign sourced income differ greatly between banks and so extra time is needed to ensure you find the loan that is best for you.
Work With A Mortgage Broker that is experienced in working with Australian Expats
I always recommend using a mortgage broker, and since the rules for lending to Australian Expats wanting to buy property in Australia vary between the banks, it is even more beneficial for Australian Expats to utilise the services of a mortgage broker. Mortgage Brokers do not cost you anything and they have access to loans from a multitude of banks. A mortgage broker that is experienced with obtaining finance for Expats will also be able to match you with the bank that will have the best lending criteria for Expats. I explore the many reasons why a mortgage broker is worthwhile in this article : Why Australian Expats Should Use a Mortgage Broker.
Unless you deal with someone experienced in obtaining finance for Australian Expats you are unlikely to get the best deal, or may find it difficult to get a loan in the first place. Lending policies to expats vary greatly between the banks, and their willingness to lend to you could be a function of what country you are residing in. By working with a mortgage broker experienced in obtaining finance for Australian Expats, they will be able to quickly identify the banks that are most likely going to support your loan application. This saves you a lot of time, as well as ensuring you get the best deal. It will also ensure you protect your credit rating by not making loan applications that will ultimately be rejected.
Get Your Loan Pre-Approved
Loan pre-approval is simply a letter from a lender, confirming that you meet their criteria for a home loan up to a certain limit. There are a number of benefits to obtaining pre-approval.
- Peace of Mind that you can actually finance a property purchase (and know exactly how much the bank is willing to lend you)
- There is no obligation to take up the finance
- Costs nothing
- It will speed up the formal approval process down the track (when you have signed a contract to purchase a property)
- It may give you an edge when negotiating a purchase as you can show the Vendor you already have a loan pre-approved.
The are however risks with just relying on a loan pre-approval when purchasing property in Australia. Many lenders will grant finance pre-approval subject to them fully checking your application when you sign a contract, and that poses many risks for Australian Expats due to the non-standard nature of their loan applications. My personal mortgage broker, Craig Vaughan from MAP Home Loans, recommends obtaining a “Fully Checked and Verified Home Loan Pre-Approval”, which means the lender does all their fact checking prior to giving you pre-approval, and avoids an ugly surprise later in the process.
Do Australian Expats Need Foreign Investment Review Board (FIRB) Approval to Purchase Property in Australia?
A common misconception of Australian Expats is that they will need to obtain Foreign Investment Review Board (FIRB) approval to purchase property in Australia. Recently the Federal Government has been cracking down on foreign investors who have purchased property without the necessary approvals from the FIRB. However, Australian Citizens living overseas do not require FIRB approval to buy property in Australia.
Obtain a Free 30 Minute Consultation With My Personal Mortgage Broker
If you are looking to finance your purchase of property in Australia, or considering refinancing your loans in Australia, then Craig Vaughan, Founder of MAP Home Loans, is offering readers of The Australian Expat Investor a free 30 Minute consultation to discuss your finance requirements. Craig doesn’t usually offer his services to new clients, so this is a great opportunity for Australian Expats to work with someone who is experienced in assisting Australian Expats get the finance they need. Complete the contact form below, and Craig will contact you to arrange an appointment.
Disclaimer : This information is for educational purposes only and does not constitute financial or taxation advice. As this information is not advice and has been prepared without taking into account your objectives, financial situation or needs you should, before acting on this information, consider its appropriateness for your circumstances. Independent advice should be obtained from an Australian financial services licensee before making investment decisions, and a registered (tax) financial advisor/accountant in relation to taxation decisions. To the extent permitted by law, we exclude all liability for any loss or damage arising in any way.