Home Loan Rate – Australia

Buying a home is never easy, and it gets harder when you are not a citizen. If you’re moving to Australia you might need some advise about the best way to move forward. Here are ten things to keep in mind.

1. Save as much money as you can. You will need to make a deposit in order to purchase a home. In most cases, your deposit will be between 10% and 20% of the value of the home (or more if you like). Lenders are much happier to work with borrowers who can save up a deposit. If you plan to buy property from Australia, you should start transferring funds into an Australian bank account, even if you don’t already live in Australia. Australian banks will see you as a lower risk when they see that you have been saving money for a period of three months or longer.

2. What will you be able to borrow? Obviously, this will depend on your financial situation and your income. That said, your residency status can also have an effect on the type of loan that you can apply for. If you are a foreign citizen or temporary resident, you will usually need to make a deposit of 20% of the value of the home. In some cases, a lender might be willing to accept a 10% deposit if you have been working in Australia for over a year. As a permanent resident, or somebody who is married to or in a relationship with a permanent resident or citizen, you will usually be eligible for a 95% mortgage.

3. Save up for expenses. No matter what size deposit you are required to make, there are other expenses that such as taxes and fees that are not included in the purchase price of the home. These amount to about 5% of the value of the home. You should expect to need to pay these costs in addition to the deposit.

4. Government approval. Since you are not a citizen or permanent resident of Australia, real estate purchases are policed by the Foreign Investment Review Board. This is not as frightening as it might sound. FIRB exists to ensure that foreign investors don’t take part in frivolous speculation that does nothing to help the Australian economy. If you are buying a home for your own personal use, you have nothing to worry about. Even so, you will need to apply for FIRB approval before buying a home. If you are an investor, you are limited to buying new property.

5. First Home Owners Grant (FHOG). Only permanent residents and citizens are eligible to receive this grant, so you should either wait until you become one or do without one.

6. Talk to a mortgage broker. Generally speaking, brokers are free in Australia. They receive commission from the lender, although they work independently of them. A broker can help you find the lender that best fits your situation. Not all banks are willing to lend to foreigners and temporary residents. They also know which lenders charge reasonable rates. In many cases, brokers have exclusive deals with lenders that are not otherwise available. A broker also eliminates the need to shop around for the right lender, and you will only need to provide your financial information once.

7. Get pre-approved. It is a bad idea to offer to buy a property without approval from the bank. If you agree to buy a home, and the bank doesn’t approve you for a loan, you can lose your deposit, and might even be sued by the vendor. Pre-approval also reduces the wait time necessary before buying a home. The right home for the right price doesn’t stay on the market for very long. If you aren’t pre-approved, it might take longer than the vendor is willing to wait for you to receive the loan.

8. Income isn’t the only consideration. Lenders will also need to collect information about your expenses. This might include the costs of marital or child support, the costs of insurance membership, memberships with other groups, cable subscriptions, private school costs, and anything else that you are required to pay for each month. If you are having trouble getting a loan for the type of home you are interested in, you might be able to help your situation by reducing some of these expenses, if possible.

9. Find a conveyancer or a solicitor. They handle the legal documents in order to make sure that there is no potential for legal problems, and to assure that the contract between you and the vendor is fair.

10. Do not apply for a large number of mortgages, loans, or credit cards in a short period of time. This can hurt your credit rating, and make it difficult to get approval.

Learn more about buying a home in Australia.

The Foreign Investment Review Board (FIRB) examines applications from overseas citizens (This includes those who live in Australia on a 457 Working Visa, and subclass 309 or 820 Temporary Resident Visas) who are looking to invest in property in Australia.
If you are looking to purchase a home to live in or an investment property you may be required to obtain FIRB approval.

Who needs to obtain FIRB approval?
In 2010 the Federal Government of Australia announced new legislation which limits exemptions for foreign citizens and temporary residents looking to purchase property in Australia.
Below is a list of those who are exempt from obtaining FIRB approval:

• Australian citizens living overseas
• New Zealand citizens
• Permanent resident visa holders
• Anyone who is married or in a de-facto relationship with an Australian citizen (not a Permanent Resident)

Please visit the FIRB website for a complete list of exempt parties.

What type of properties can I purchase?

• Owner Occupied Property: If you are buying a home then you may be able to buy an established property (one that wasn’t recently built). You will have to sell your property if you move back to your home country or elsewhere in Australia – If you have obtained your permanent residency in the meantime then you will not be required to sell the property.
• Investment Properties: In most cases the Australian government will approve applications to buy an investment property on the condition that it is a new property (new development or if you buy land and build a property). You can often keep an investment property if you leave Australia.

Applying for permanent residency / citizenship

It is not known by us if owning real estate in Australia in any way affects your application for citizenship. Please refer these questions to your migration agent.

When is FIRB approval required?

You should apply for FIRB “pre-approval” once you have decided to buy a property in Australia; you can then look for a property at your leisure. Your solicitor or conveyancer will usually help you with your application for FIRB approval as part of their normal services.

We recommend that you obtain FIRB pre-approval at the same time as you apply with us for your mortgage pre-approval. To find out more refer to the applying for a loan section of our website.

Do you need help with a loan?

We are mortgage brokers who specialise in financing the purchase of Australian real estate by foreigners, Australians living abroad and people temporarily residing in Australia. This includes those who live in Australia on a 457 Working Visa, and subclass 309 or 820 Temporary Resident Visas.

Please refer to our Non-Resident Finance website for information about the loans that you may qualify for.

When applying for a mortgage, no doubt you have shopped around for the best interest rate and lowest fees. However almost nobody checks to see if their application meets the lenders guidelines & credit policy!

You see, the problem is that lenders don’t publish their rules to the public. That would make it too easy for people to find loopholes and “game” the system. Every financial institution in the USA, UK & Australia has its own set of rules they must abide by before approving a mortgage.

The credit assessor in the bank who signs off on the approval must follow the guidelines which has been created by the bank, otherwise they risk losing their job. For this reason credit policy is often treated like gospel, and it is rare for policy exceptions to be made.

Each financial institution lending money has different guidelines with specific differences and certain things they cannot approve. This is where the assistance of a mortgage broker is essential as they have knowledge and access to all the lenders guidelines to make sure that your application is perfect for the bank that it will be placed with.

For a standard application with a large deposit, long term employment and no credit history issues this is considered as the perfect application for a bank & will be accepted by everyone. But let’s be serious, not many applicants are like this. Many people have credit impairments, short term employment, unsecured debt, a small deposit or a combination of all of these.

What is in the Lenders Guidelines?

The Lenders Guideline is the rule book of what the Bank looks at and what they can accept when approving your loan:

• Employment – Banks generally require a minimum of 6 months in current job, most do not accept probation and usage of casual or 2nd Job Income must be evident over 12 months.
• Credit Report – Mainly for credit impairment the lenders guideline will advise how many defaults, amounts or timing of defaults which are acceptable to them.
• Savings – Generally all lenders are now requesting that evidence of the deposit be saved over a 3 month period this being called “Genuine Savings”.
• Age – Although lenders are not allowed to discriminate against age, but they may show a stricter view to people who are close to retirement.
• Security – All Lenders will have a list of what type of securities they can take on, this will also provide of list of types they cannot accept and certain areas that they will not do either. Vacant land is a prime example this will advise the maximize size of land they can accept.
• Types of loans – The Lender Guideline will outline what type of loan the bank can accept from purchase, refinances, low doc, guarantor loans, trusts or company purchases.
• Documents – from payslips to tax returns this will outline what is required for each client.

As you can see the guidelines are complex. However the key is that they vary between lenders! Apply with the right lender and your problem is solved! The best way to find the right lender is to use a mortgage broker who specialises in the credit policy of each bank.

The 457 VISA is the easiest means by which Australia can have access to skilled workers.  These workers are authorized to live in Australia for at least three months to a maximum of four years.  This makes job hunting and living in Australia much easier for foreigners who live and work temporarily in the country.

The question often asked is can 457 visa holders purchase a home in Australia?  Another common question is if these visa holders can likewise apply for a home loan in Australia?  Fortunately the answers to both questions are a resounding yes!

Of course the number one requirement is that FIRB approval is required unless you are exempt.  You will also be required to make a deposit of at least 20%.  These requirements are not hard to fulfil thus, being a foreigner is not at all a hindrance to acquiring a home or getting a home loan.

Some may be even entitled to the FHOG or first home owners grant.  Holders of the 457 visa can loan is up to 80% of the property’s value.  The amounts that the lenders will be willing to loan may vary depending on the amount of time you have already spent in Australia, the stability of your employment, and proof of capacity to pay.  Those who have just come in and started working in Australia may apply for a loan straight away, but they should not expect good rates, as banks and lenders may see these applicants as too much of a risk.

The home loan experts would be happy to assist in your search for the perfect place to live in Australia.  They possess the expertise required in order for the holders of these visas to get a 457 visa mortgage, and enable them to make the most of their stay in Australia and get a property that is worthwhile to live in and invest in.

Investing in a foreign country is always risky.  The business and mortgage practices are different, and you are not familiar with how stable that country is.  For ‘would be’ investors in Australia there are a host of possible opportunities for purchasing real estate that can really earn you back your investment and make you some profits.

This means that you may require our help in deciding which property should be a worthwhile purchase. With so many options available it can become very confusing. What is even more confusing is the range and variety of lenders who may try to take advantage of the limited knowledge as a new investor in a foreign land. This can be avoided by working with us as we have contacts with many trusted banks and lenders that we can tailor fit a 90% home loan for you.

Due to the fact that it is a 90% home loan the investor would of course be required to deposit a certain amount in order to have your home loan approved.  Without the deposit you will generally not be allowed to get a loan.  However, in some exceptional circumstances where other property is likewise mortgaged, there is a good chance that you will be able to get a good deal on the loan.

The nice thing about the 90% loan is that you need not have genuine savings available to apply for it and get approved.  A gift from a relative will do in order to do away with the requirement of genuine savings.  You may need a gift letter to encourage the banks to approve the loan, but this is a generally accepted practice.

Some would like the possibility of getting a 100% home loan, and this is very possible only if some other person is willing to act as guarantor of the person applying for the loan.  With the help of a guarantor, finally deciding on the 90% home loan would be much easier.

There are a lot of instances when purchasing property in Australia has its benefits.  This is true whether you are a foreigner or an Australian citizen.  Investing in property and real estate and Australia is often low risk as value of property is constantly on the rise.

However certain steps must be taken before a loan can be made.  First and foremost Foreign Investment Regulatory Board (FIRB) approval is often necessary unless you fall under the exceptions.  There are several exceptions.

First and foremost an Australian citizen living approval does not need FIRB approval.  Where your spouse is Australian, and you are purchasing a house to live in as joint tenants you likewise need not ask for FIRB approval.  Residents of New Zealand are likewise exempt, and if you hold a permanent resident visa you need not seek any approval.

Temporary residents on the other hand are exempt when purchasing single blocks of vacant land, or new dwellings.  Purchasing a second hand dwelling to live in is also exempt, or even purchasing new dwelling as long as they are pre approved to be sold to foreign citizens.

If you fall within these exemptions, that is one less process to worry about.

Whether or not you need FIRB approval is one thing, while another item for those trying to get a loan is how much of a loan they can get.  Australian citizens living abroad can generally get up to 95% LVR with LMI.  This is the same maximum for those with foreign spouses either working abroad or working in Australia.  Temporary residents working in Australia on the other hand can get up to 85% LVR, while foreign nationals who live and work abroad can get up to 80% of the total property value.

Investing and buying real estate is a genuine opportunity to make a wise investment.  As long as all the requirements such as FIRB approval and the necessary documents are submitted, it shouldn’t be hard at all for a foreigner to get a loan to purchase the property they would like in Australia.

A year after the subprime mortgage crisis struck the United States, the effects are still being felt around the globe.  There is an economic slowdown, and prices of real estate have not yet fully recovered.  Buyers and investors are also looking for alternative places to invest their money, and trying to find safe havens for sure and steady earnings.

Fortunately for some investors, they have found this safe haven in Australia.  Prices of real estate have been steadily on the rise, and there has not been much depreciation felt in majority of the country.  Of course those looking for good deals and real estate bargains can simply do a little more research, and find that investment opportunity abound.

Investors whether foreigners or citizens can choose from a variety of investments.  They can try purchasing off the plan units, or buy multiple apartments on one title.  Student accommodation purchases are also common and purchasing properties in mining towns can also be an option.  Vacant land can likewise be purchased and later developed, and high end properties worth millions can also be purchased by prospective investors.

With the wide variety of choices of real estate properties to invest in, it would be nearly impossible not to find an interesting property for possible investment.  Considering that the land area in Australia is huge, the potential for expansion of real estate is endless, and the possibilities are limitless.  With a stream of constant investment opportunities, and unlimited choices, an investor could not ask for more.

In order to make sure that you are able to make the most of your time and money it would be best to consult the experts on home loans,  They can provide you with the necessary information, and provide you with the details of investment opportunities in Australia. They can also ensure that you are able to provide the proper documents when you engage in investing and real estate related purchases in Australia.

You have lived and worked “down under” for a number of years already, yet you are still renting a place, and paying the monthly rent is becoming too much of a hassle for you.  You would like a place to call home, but the problem is you are not an Australian citizen.  You ask, is it possible for a foreign citizen to be granted a home loan?

The answer to the above question is a resounding yes!  You may be a non-resident, but do not despair, it still does not deprive you of your right to live in place that you can call your own.  This should also clarify the long standing misbelief that just because you are a foreigner, you are not qualified to get a mortgage.

Of course it may sound easier than the actual loan application, but that shouldn’t be much of a bother.  The point of the situation is the fact that foreigners can be granted home loans.

The basic requirement is generally FIRB approval.  Once this is granted then purchasing property with the use of your home loan should not be a problem.

Once these requirements are submitted, then you basically have as much of a chance as any Australian citizen in getting a home loan.  In fact, citizenship actually is not a major factor.  The important part is that you can show you are capable of paying the loan, and if you have a strong financial position.  Always remember that banks and lenders are just seeking to find the best borrowers, and this means borrowers who can and will pay on time.  Just because you are a foreigner does not mean you are a bad borrower.  In fact, you may be a better borrower than most as long as you can prove it by providing the bank or lender with the necessary documents.

In these instances it is also good to point out that if you are not a citizen, but are married to an Australian, then this increases the chances of your loan being granted in the first place, less documentary requirements, and generally you can get up to 95% of the value of the property as a loan.

For more information on loans of this nature, it would be best to consult the experts.  They can provide you with tips and advice on how to ensure that your home loan application is granted for a temporary visa holder living in Australia.