Home Loans With A 457 Visa

April 27th, 2011 44 Comments
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If you are classified as a temporary resident of Australia with a 457 visa, there are certain obstacles that you may face which can make applying for a mortgage more difficult. Buying a home is never a simple process, and it certainly doesn’t get any easier if you are considered a foreign citizen. That said, a more complicated application process shouldn’t be enough to discourage anybody from buying a home, which is one of the most rewarding financial decisions that you will make in a lifetime.

Deposit

The first obstacle that you are likely to face is the deposit. Many Australian citizens can apply for a loan with a small deposit, or no deposit to speak of. If you are staying in the country on a skilled workers visa, this typically is not an option, In most cases, you will be required to make a deposit worth 20% of the value of the home. For a $200,000 home, this would be $40,000.

The expenses associated with buying a new home amount to about 5%, so it is generally a good idea to save up about 25%. In the example above, the extra 5% would be $10,000, bringing the total that you should save up to $50,000.

While this obstacle may be frustrating, it may actually be for the best in the long run. Those who have the opportunity to apply for a mortgage with a smaller or nonexistent deposit will also pay a higher interest rate, and be required to pay for the lender’s insurance that the bank needs to protect itself against the threat of foreclosure.

If you have been working at your current job for more than a year, it may be possible in some circumstances for you to apply for a mortgage with only a 10% deposit. You will typically need to work with a mortgage broker who offers this type of deal in order to qualify.

Options

Not all lenders will be willing to work with somebody who is in the country on a 457 mortgage. Many banks consider you to be too high a risk. Fortunately, the banks that are willing to work with you will tend to treat you the same way that they would treat a citizen. As mentioned above, their will often be limitations on the size of your deposit, but beyond that the interest rates and terms of the home loan should be essentially the same.

Since it can be somewhat difficult to find these lenders, it is a good idea to get in touch with a mortgage broker. Brokers have contacts in the lending industry, and know exactly which banks are willing to work with you and your situation. This saves you the time that it would take to shop around and find a lender that is willing to work with you. Brokers also know which lenders offer the best interest rates. There are even some brokers available who specialize in working with immigrants and temporary residents, which helps the process run even more smoothly.

Government Involvement

Another thing to be aware of is the Foreign Investment Review Board, known as FIRB. Since you are not a resident of Australia, you need to apply for approval from FIRB. This may sound somewhat concerning, but rest assured that nearly all applications are approved. Still, it is worth understanding the involvement of this government organization.

To begin, you are not prohibited from purchasing either old or new property, as long as you plan to live in the property yourself. If you leave the country, you will be required to sell the home. If the property is old, you can’t buy it unless you are going to live in it.

Another thing to keep in mind is that your own personal financial situation has no bearing on FIRB approval. The board only considers your residency status and the type of property you are considering buying.

The process of applying for approval from the board is relatively simple. The form is only about three pages in length. As long as you are buying the home for your own personal use, and not as an investment, you shouldn’t have any problems. If you are buying the property for investment, you still won’t tend to have problems as long as the property is new.

Can You Receive a Grant?

In most cases, you will not be eligible to apply for the First Home Owner’s Grant (FHOG) unless you are an Australian citizen or permanent resident. There may be an exception if you are buying a home with somebody who is a resident or citizen.

Learn more about 457 visas.

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