10 Tips for Australian Expats Needing To Get A Mortgage – over the past couple of years it has become harder for Australian expats to obtain a mortgage on Australian property.

As part of our Ask An Expert Webinar series we interviewed Jeremy Harper from Hfinance on what the key things that you need to consider when an Australian expat is applying for a mortgage.

 

 

10 Tips To Help Australian Expats Get a Mortgage

 

Here are 10 tips to help Australian expats get a mortgage in Australia:

  1. Foreign Salary – all depending on what currency (gold or silver tier) you earn your salary in and where you live will dictate whether an Australian bank is not only willing to provide a mortgage to an Australian expat but also how much they will lend.
  2. World Wide Assets – all depending on what assets you own overseas, and whether they are liquid or not, will dictate what the Australian banks may or may not take into account in your credit assessment. .
  3. Deposit Requirements – generally all Australian banks will provide an Australian expat a mortgage if you are able to provide a 30% deposit and then some will even entertain a 20% deposit. Any less will trigger Lenders Mortgage Insurance (LMI) which isn’t available to Australian expats.
  4. Purchasing With A Foreign Citizen – Generally the banks will only consider the income of the Australian expat when providing a mortgage.
  5. Currency Risks – when assessing a loan application the banks will normally shave 20% off the currency you are currently earning your salary in to take into account any currency fluctuations.
  6. Lender Policy – the banks lending policy and appetite for Australian expat mortgages can change week to week so its important to work with a mortgage broker who knows the landscape.
  7. Credit Score – recently introduced credit scores are being increasingly replied upon when determining whether to approve a mortgage application.
  8. Offset vs Redraw – understand the difference between a offset and redraw account and the tax implications that the different account types may have.
  9. Bank Valuations – be cautious of property valuations especially when settling on off the plan apartment sales.
  10. Purpose of Property Purchase – whether you are purchasing a property in Australia for investment purposes or to return to when you move back to Australia can have a bearing on whether your application is successful or not.

 

 

James Ridley:                     G’day expats. Today we’re just doing another Ask An Expert Webinar Series. And the topic of today is, 10 Things Australian Expats Need to Know About Getting a Mortgage in Australia. Today I’m joined with Jeremy Harper, from hfinance, who is an Australian expat Mortgage Broker specialist. As we progress through we’re going to touch base on these different things as well as a bit on the mortgage process and just key items that you really need to be aware of, especially when you’re trying to obtain a mortgage from a foreign country.

James Ridley:                     So, as we progress through now, just going to touch base on a short disclaimer. Obviously, anything that you hear in this presentation is not personal advice, please do not take it as such. It’s all general in nature, mainly informative and educational. Obviously, if you need a mortgage, feel free to reach out at the end of the slide. Jeremy’s details will come through but make sure you always seek advice from a professional that’s qualified in that specific area.

James Ridley:                     So moving through now, we’re going to touch base on who is Atlas Wealth? So Atlas Wealth Management, we’re a leading provider of Australian expat tax & financial advice, and have won multiple domestic and international awards for the services that we provide to Australian expats overseas. So we’ve got clients in over 28 countries now, all which receive financial advice from us in an ongoing manner. We are the global financial advisers to Australian expats. I’m joined with today my co-host, Jeremy. Jeremy, if you can just raise your arm and say hello. Here we go.

Jeremy Harper:                 Hi, James. Thanks for having me.

James Ridley:                     No worries mate. So obviously, Jeremy Harper of hfinance. Hfinance started back in 2015. Jeremy’s obviously the Managing Director of hfinance, and is also a Chartered Accountant. I might just pause there. How long were you a Chartered Accountant before, Jeremy?

Jeremy Harper:                 When I finished university in Melbourne, started working for mid tier in tax advisory for a couple of years and then, started working in industry, working for a company doing some management accounting. And then decided to jump into the mortgage brokering game. Well, I enjoyed working with clients and obviously working industry. I missed that client interaction and I saw a gap in terms of financial literacy and helping up people with their mortgages.

James Ridley:                     Yeah, that’s right. And you’re focused on a particular niche. There’s a big need for a big drive for it. It’s a massive market. And there’s not too many people that focus on assisting Australian Expats with mortgages. It’s sort of a bit of a grey area. I imagine for a lot of brokers because they just don’t know how to treat Australian expats. And I see here also, you’re previously an Australian expat living in New York with your wife. Is that right?

Jeremy Harper:                 Yeah. So lived in Upper East Side in Manhattan for couple years. So understand the life of this Australian expat, being one myself, excuse me. Then previously, we’ve moved back to Sydney. So, I understand filing two types of tax returns and opening up the bank accounts and just some of the challenges that come with being on the other side of the globe, with the time zone and the different currencies. So, yes, I understand how the Australian expat life works a little bit.

James Ridley:                     Yeah, absolutely. And I think, you’ve probably, you got to be maybe over dealing with the IRS as well?

Jeremy Harper:                 Yeah.

James Ridley:                     I mean, I always term them as the worst taxation authority in the world. And no one’s going to come close to them, but more on that, you now back you living in Sydney, aren’t you?

Jeremy Harper:                 Yes, yes. So good living in Sydney. And so, I continue doing the Australian expat mortgage piece, which’s been great. So just a little bit about how the Australian expat mortgage broking works. I’ve got accreditation’s with about 35 Australian lenders up from the big banks, middle tier and some smaller players. Even, we’ve got a new digital bank that just came on board. So it’s quite exciting. So it gives clients access to lots of options. And then, on that panel, there’s probably about a dozen lenders that come in and out of the Australian expat space when we’re using foreign income, sometimes policy will say, “Yes, we’re playing that space,” sometimes they’ll pull out just depending on their credit appetite. So for me, it’s always important to give Australian expats, a number of options suitable for their circumstances.

James Ridley:                     Yeah, of course. I mean, when I saw that, you have 12 plus lenders on a panel, happy providing Australian expats mortgages, I was actually quite shocked, to be honest. I didn’t think they’d be that many. I thought it would be a lot less than… I originally had the interpretation, that the big four banks didn’t like Australian expats. So the fact that there are some that still are happy lending to them, still good rates as well, I was very surprised. So it just goes to show that it pays to obviously speak to a specialist in that area, rather than just obviously engaging the big four banks and accepting what’s they are going to give you.

Jeremy Harper:                 Yeah, yeah.

 

Step 1 – Mortgage Process

 

James Ridley:                     Absolutely. Okay. Well, let’s transition over now to the next slide. Let’s talk a bit before we dive into more about just the mortgage process. For people that haven’t got a mortgage before and are considering sending funds home to invest back in Australia or get that investment property or that future main residence. How does the mortgage process look? You’ve outlined it here, but yeah, walk us through it?

Jeremy Harper:                 Sure. So I guess the first step is obviously a mortgage meeting, given fact finding discovery. Obviously, being an Australian expat, that’s going to be a video conference or a phone call scheduled depending on time zones. And from that initial meeting, it’s really understanding, “Okay, what are their goals, short term, long term? What do they actually want to achieve with a mortgage?” And then, understand a little bit about themselves. So, what sort of currency are you earning? Where are you living? How they are earning income, is it PAYG or W2? Is it commissioned bonus income that we need to think about? Or are they self employed? Or they are a contractor roll  living overseas? So getting to understand that and then also, on expense side, how they are living? Do they have a mortgage overseas? Are they renting? Are they packaged up with work where they’re providing rental assistance at this stage? And then, do they have kids? Or is it just themselves, individually, dual application?

 

Step 2 – Credit Assessment

 

Jeremy Harper:                 So getting all that information up front. And then that takes me to sort of the second step, which is I’ll typically go away offline, do what I’ll call a credit assessment. So, really crunch the numbers in the back end and go, “Okay, this is where you sit from the mortgage point of view. These are kind of roughly where your options are.” Maybe they’re ready to go ahead with looking at some products or maybe it could be, “Let’s put this on hold and you need to do a few things. Maybe you need to pay off some credit card debt abroad or close off credit cards. Come back to me in a couple of months time, or maybe you can come back six months time when you’ve saved up a little bit more deposit. And then, we can go ahead and actually chat about product and different lending options.”

James Ridley:                     Yeah.

Jeremy Harper:                 So-

James Ridley:                     Yeah. Sorry, you go.

 

Step 3 – Product Recommendations

 

Jeremy Harper:                 Yeah. I was going to say, which takes us to step three, if they’re ready for, “Okay, we need to go ahead with looking at applications.” So then, I’ll put you through a couple of different products or a couple of different lenders on my panel that will suit what they’re trying to achieve. And part of that is actually talking about product as well, which we’ll touch on a bit later. But going through things like offset accounts, redraw accounts, if the clients are looking at principal and interest rate payments versus interest only, or looking at variable loans versus fixed. So it’s quite..

James Ridley:                     All those crucial features of the mortgage. Yeah, what’s if-

 

Step 4 – Submit Mortgage Application

 

Jeremy Harper:                 Correct. And part of that product recommendation, will come back to what they’d like. So for example, if a client after an offset account, some of those lenders on a panel don’t actually offer offset accounts to Australian expats. So, I’ll have to strike them off my recommendations. Some won’t allow interest only repayment. So again, it will narrow down how many options are available, and will go through sort of what that would look like in terms of repayment, fees and interest expenses.

 

Step 5 – Pre-Approval

 

James Ridley:                     Yep. Okay. And as we move through, obviously, you’ve got the pre-approval-

Jeremy Harper:                 Correct.

James Ridley:                     … which is that just essentially saying, “This is how much you can borrow with these lenders?”

Jeremy Harper:                 Correct. So if someone’s looking to buy an investment property, and they want to buy something up to let’s say, 500,000 Australian dollars, will give them a pre-approval for, say, an 80% finance. And that means will give them confidence that, that’s valid for three months. And they can go to market and then start looking at property. And which, takes you to step six, because a lot of people will start looking at property online, get really excited and then, work backwards to say how much they can afford. I always say, “Let’s get the pre-approval first.” So you actually understand, “Okay, the bank will lend me for a $500,000 purchase,” then they can go to start searching for property.

James Ridley:                     Yeah. So we can sort of get a bit excited as well, you know?

Jeremy Harper:                 Correct.

 

Step 6 – Locate the Property

 

James Ridley:                     Find that property, then go, “Okay, crap,” got to look at how you actually buy it now. And sometimes, maybe you can’t, depending on the circumstances, which is unfortunate. And then obviously, as you mentioned there, find the property after your pre-approval, and then formal approval, going through the process of buying or managing and putting down those funds.

 

Step 7 – Formal Approval

 

Jeremy Harper:                 Yeah. And so, I guess, the things you can see around, formal approval and settlement, and this is really conversation to have with your conveyancer or lawyer that helps you out. But I always recommend trying to negotiate sort of a 45 day settlement, so we can arrange the loan documents, give yourselves a bit more time. Again, depending on the lender, you might need to receive the loan documents, booking a time with a consulate to get a witness, so that add to the settlement process. Then you need to mail them back to Australia. So all those can can be 5, 10 working days. Typically, depends on where you’re located, and you need to make an appointment.

 

Step 8 – Settlement

 

Jeremy Harper:                 So there’s a little bit to work around, getting the loan ready for settlement. Obviously, if you get those affairs in order, quickly, and the bank’s ready to settle, we can bring forward the settlement as well. But always negotiate for longer settlement with the idea of trying to get it arranged in time.

James Ridley:                     Yeah, I imagine not too many even conveyancers wouldn’t think about maybe just extending that sort of timeframe because you’ve got to deal with international post. Anything’s with clients by FedEx, whatever it might be.

Jeremy Harper:                 And it’s also allowing for things like, and I’ve seen that, docs go out, the bank hasn’t included the car park on the title, so they had to reissue loan documents, or they misspelt the borrower’s name, so we can’t get to settlement. So there’s always little things that can pop up. So just giving a little bit more time.

James Ridley:                     Yeah, bit of breathing room and then obviously, settlement takes places, as everything is more formalised. So no, that’s good. That’s been a great outlay about the mortgage process. And I think a crucial factor there is just as settlement comes up giving yourself that time, giving yourself that cushion, because depending on where you are, sometimes international mail isn’t the most secure form, especially throughout the Southeast Asian countries, actually, you might not get it, to be honest. You might have seen that happen with a few clients with a few different bits and pieces.

 

10 Steps to a Australian Expat Mortgage Process

 

In summary here are the 10 steps to the Australian expat mortgage process to help you buy your home or investment property in Australia:

Step 1 – Mortgage Meeting

Step 2 – Credit Assessment

Step 3 – Product Recommendations

Step 4 – Submit Mortgage Application

Step 5 – Pre-Approval

Step 6 – Locate Property

Step 7 – Formal Approval

Step 8 – Settlement

 

How Does a Australian Bank Treat a Foreign Salary?

 

James Ridley:                     Let’s move on now. Topic number one, foreign salary. So if we’re obviously living overseas in another country, how does an Australian lender view a foreign salary? As an example, to give a bit of background, some clients might be in a situation where they’re on a base salary, but they’re also receiving all of these allowances. So how does a lender treat a foreign salary? Especially, for maybe as the next point mentioned, is converting back to Australian dollars and those sort of things.

Jeremy Harper:                 Yeah, so look this, obviously, you’ve got the base allowances and bonuses, which we’ve also put into the mix as well.

James Ridley:                     Yeah.

Jeremy Harper:                 So, I guess the first thing is banks have what you call, generally speaking gold and silver tier currency. So U.S. dollars is your gold standard, your pounds, your euros where it’s a bit more of a reliable currency. So generally, the bank will convert that from the foreign currency to Australian dollars at spot rate, and generally shave 20% off. So if it’s 100,000, they’ll take it back just for FX purposes.

James Ridley:                     Yeah.

Jeremy Harper:                 And then, once they’ve shaved that, we can use that for servicing. So, generally, with the base allowance, that’s what needs to be done from a servicing point of view. But when you talk about allowances, some lenders get a little bit funny, some are happy to take another 20% off for shaving, some will only take half and some will actually not use that as acceptable income. Because they don’t view it as a reliable source of income compared to salary.

James Ridley:                     Yeah.

Jeremy Harper:                 Now, even though part of the process we’ll present to the  lender, the contract of employment. So you can see clearly outlined, “Here’s my base, and here’s my allowance, that’s a part of my employment package.” Regardless, I can still be a little bit sort of thingy about using all the allowances for income. So that’s just something as part of my recommendations are way up. “Okay, do we need the allowances and bonus income for servicing? If so, that might steer us towards a couple of different lenders who are more open to using that type of income. If not, and we can just service off the base income, that’s fine.”

James Ridley:                     Yeah.

Jeremy Harper:                 If the client is getting paid in a currency outside of USD, so you’ve got the AED here, again that’s some lenders will just have not acceptable currency on their list. So you could service with that lender, but because you are getting paid in AED, in Dirhams, they just won’t accept that all. So that’s not a deal for that lender. And now you’ll find that with some of the more unique currencies that I see as well, some banks just go, “No, no, sorry, that’s not acceptable. We can’t help that client at all.” Whereas some lenders have a range, like a big list of currencies they’ll accept. So-

James Ridley:                     They’ll accept, okay.

Jeremy Harper:                 … the more unique the currency get paid in, potentially the harder way to get a loan financed and that’s something we would work through. And then, finally, on your last point, most of the lenders I’ve got, will apply the Australian tax rate, for servicing purposes. So you’ll find that, okay, you’re in a tax free jurisdiction, you may be in the Middle East or somewhere in Asia where you’re paying very low tax or no tax, they’ll still apply the Australian tax rate to servicing. So that will obviously decrease your borrowing capacity. But we do have some lenders that will look at, “Okay, we’re going to do the servicing based on your net of tax income. So if you’re paying very little tax where you’re living, they will actually accept that and apply as a tax free income service.” So you’re going to have these big differences in borrowing capacity between lenders.

James Ridley:                     Yeah. I mean, it’s a real shame that, that’s how some of the lenders treat it. Because as an example, if you touch base back on the allowances, you might have them say someone that, their base salary might be 100,000, but they get an additional $150,000 in allowances dumped on them, that might be for schooling, living allowances, car loans, but they’re not using it, but they still get a paid term that the lender doesn’t care.

James Ridley:                     And then, another important factor that you make there is, if I’m in a tax free sort of income area, which is common with the Middle East, they’re still going to treat it like you’re employed in Australia. And I can think of common cases like that. There’s quite a few nurses that obviously, live and work over in UAE, and they’re still on somewhat equivalent salaries here, maybe $90,000, $100,000, but it’s all tax free. They’ve got a good asset base, good deposit but the lender, depending on the lender policy, is going to walk in and say, “Sorry, we actually can’t lend to you even though you’re on this great tax free income, which is tied to the U.S. dollars.” That’s a real shame, yeah.

Jeremy Harper:                 Yeah.

James Ridley:                     But I mean, that’s very interesting. Especially, the fact that I didn’t realise that lenders have different policies around currencies in terms of their tiers. You mentioned the gold tier in the U.S. dollar, I can understand that. Then there’s obviously a tier where, there’s exotic currencies much I can think probably, again through the Middle East or the Riyals, or those different ones where they’re probably just like, it’s too uncertain.

Jeremy Harper:                 Yeah. Yeah. And that depends on the individual banks policy. For my role, it’s really about finding a bank that will accept that currency and support that from on the application.

 

How Do Australian Banks Treat Worldwide Assets?

 

James Ridley:                     Yep. Yeah, okay. That makes sense. All right, let’s carry forward on to the next slide, which is worldwide assets. So if I’m coming back to Australia, or looking to purchase in Australia. How does the lender view my worldwide assets? And an example of that might be, I’ve got a property in the U.S. that’s almost paid off. Do they take that into account in terms of my worldwide assets and all?

Jeremy Harper:                 So part of the application, the banks are really focused on funds complete. So assets could be cash, shares, or liquid assets that are in Australia, which is quite easy to verify. We print out a bank statement with their name, say, “Yes, we’ve got X amount in this certain bank.” But if they’ve got cash sitting overseas, shares, that will get converted at the spot rate ?

James Ridley:                     Yeah.

Jeremy Harper:                 And we could say, “Okay, we’ve got $100,000 to U.S. Bank Count, $140,000 Australian.” You print that out with their name. Now, at the application stage, it doesn’t need to be physically put into the Australian bank account. We just to present the lender and say okay, “At settlement, here’s our funds we have overseas. That will be in Australia.” And then the credit team will look at that coming across.

Jeremy Harper:                 When you talking about property, that’s a little bit different. Because it’s not a liquid asset, you can certainly would list down as an asset on the application to show you, here’s my Australian and international asset.” In terms of using as funds for the purchase of the Australian property, that’s going to be a little bit tricky, because unless you’ve got a contract to sell it abroad. But if you’re trying to hold on to it, you’d really have to show that you’ve got potentially a mortgage against it to release the equity. Let’s say it’s a U.S. property, you’ve got a U.S. mortgage approved, and we’ve got a loan of credit that we can draw down, and we’re going to use those funds to purchase in Australia.

James Ridley:                     Yeah.

Jeremy Harper:                 But in saying that, if you do have a mortgage on top of that, to get the equity out, we’d have to factor in that U.S. mortgage on the Australian application as well for servicing.

James Ridley:                     Okay. I’ve got a bit of ad hoc question to this point. And it’s mainly around when a client is coming up to this stage of Australian expatriating heading over to another country. Do you often find a case where clients might refinance on an Australian property to take that equity that as maybe a deposit to another country to buy a house?

Jeremy Harper:                 Yes. The challenge with that is when you do the application, you have to say there’s going to be any adverse changes to the client circumstances in the near future. So obviously, if that’s the case, we just have to map out, okay, well, yes, we don’t take out some equity on the same property to buy when they move overseas. But we’ll also have to give the bank comfort that, okay, you don’t have a job lined up overseas, which obviously will, because you are moving overseas. And that if you don’t take a mortgage in America to finish off that purchase, then obviously, you can service the refinanced loan plus the new loan under the new under the new income.

James Ridley:                     Yeah, okay. Another point here is, you mentioned, looking at my assets when how it in multiple country, currencies and so it sounds like they’re just taking the spot rate? But as you said they shave off the 20%, is that right?

Jeremy Harper:                 Mm-hmm (affirmative).

James Ridley:                     There’s a margin of error that they factor in?

Jeremy Harper:                 Would the 20% shavings for servicing?

James Ridley:                     Okay, yep.

Jeremy Harper:                 So that’s to be at a service that propose loan. But in terms of presenting the personal asset liability statement to the bank, which I’m just doing a conversion at spot rate because what you’re telling the bank is you’re saying, “Okay, we’re $100,000 in U.S. but it’s actually worth 144 in Australian dollars. And obviously, the application we present to the bank in Australia, everything is listed in AUD values.

 

What Size Deposit Does an Australian Expat Need to Get a Mortgage?

 

James Ridley:                     Yep. Okay. Now elaborating that makes it clear. Well, let’s move on now to the next slide, number three, which is talking about deposit requirements. Now, first point that here we can see, do I require more cash or other assets as an Australian expat to get a mortgage? I think that question that I’ve sort of find there is mainly around, “Am I seen as an additional risk? And therefore, do I need more money to get that loan? Do I need a higher percentage deposit?

Jeremy Harper:                 Yeah. Generally speaking, most of the bank’s policy is, all of them will allow a 30% deposit. And then 20% deposit will be allowable with a number of lenders as well. The biggest restriction is being an Australian expat, do I get to go into LMI, which is Lenders Mortgage Insurance. So if I live in Australia, and I’m residing in Australia, and I want to buy an investment property or even a property to live in, I can go to a bank and go up to 95%. So I could have a 5% deposit. I’ll pay mortgage insurance to that lender for that low deposit. So that could be the difference. That’s not allowable at all with any lenders. So you need a 20 or 30% deposit, but in saying that, it doesn’t just have to be cash. If the Australian expat has existing property in Australia that they’ve got equity in, they can release equity on that property to buy another Australian property.

James Ridley:                     Yeah, okay. That’s an important point, I think, before we started this webinar, you were telling me about guarantors. How an Australian expat living overseas might have their parents living back here. Their parents have obviously paid off their loan, they’re retired. How does that operate with maybe using a parent as a guarantor for an Australian expat property purchase?

Jeremy Harper:                 Yeah. So provided the guarantors are still living in Australia, and they’ve got a suitable property, that they can use a security, the bank could potentially help them out in terms of using that security, maybe taking a 10 or 20% secured charge or limited guarantee against that property. And using that as the deposit for the purchase. So, the borrowers, the Australian expats overseas that will be assessed on servicing the 80% loan, which is secured against the purchase, plus the 10 or 20% loan secured against mom or dad’s property. And the two loans splits they have to be demonstrated to service on the overseas income. So that is definitely possible.

James Ridley:                     Mm-hmm (affirmative).

Jeremy Harper:                 Just the biggest restriction is the guarantors have to be living in Australia. So mom and dad can’t be retired in Greece or on the beaches in Italy that just wouldn’t fly with the banks.

James Ridley:                     That’s an important point you make there about the Lenders Mortgage Insurance have most lenders, or they don’t want that factors fixed into the equation, they want to make sure you’ve got that capital for that minimum 20% initially. Or in this case, as an example, a guarantor. That’s a big takeaway to take away from that, especially from a deposit requirement point of view.

 

Can a Foreign Citizen Get a Mortgage With an Australian Expat?

 

James Ridley:                     The next point number four, as we move forward is purchasing with a foreign citizen. So, I’ll give you a bit of background. Usually when we go on these Australian expat roles, if we’re single, we might go to another country, and we might meet a new life partner and we’ve saved up over two years, whether we’re living in the UK, New York, overseas in Dubai, or wherever it might be, and built up a large deposit that we want to send back to Australia to purchase the house. Now, obviously, my partner is a foreign citizen, they’re a foreign resident. So, can I actually attain a mortgage with my partner? It’s not an Australian citizen nor have I ever been a permanent resident.

Jeremy Harper:                 Yeah. I guess there’s two things to think about this. One is who’s going to be on the title? So if you want the Australian citizen, and the non-resident on the title, there’s one thing we need to consider, which is the FIRB, which is a government agency. They brought in a bunch of rules couple years ago around non-residents purchasing, or restricting or slowing down the purchasing of Australian property. So if you go into on that website, you can see there’s exemptions around. If you’re a spouse of Australian citizen, you may be exempt from having to pay the additional surcharge being for purchasing as a foreign resident. So that’s-

James Ridley:                     That surcharge mentioned that’s on the stamp duty that you are using, is it?

Jeremy Harper:                 Correct. Yeah.

James Ridley:                     Yeah.

Jeremy Harper:                 Look I think it comes down to state by state, but it can be anywhere up to additional 5, 6% on top of your regular stampt duty. And then there’s more fees. So it’s quite an expensive exercise if you buying as a non-resident. So what I would recommend, if you’re in those circumstances go onto the website, firb.gov.au. Have a look at the exemptions and read up about that. So that’s on the ownership. On the mortgage, so there’s a couple of things to consider obviously, as part of responsible lending, you have to show a benefit. And this is really a hot topic, the benefits of being on the mortgage. So if you’re on loan, what’s the benefit?

Jeremy Harper:                 Now, if you’re living in a property, and it’s in one person’s name and your spouse relationship, and you’re both on the mortgage, well, you can demonstrate this benefit because you’re taking the benefit of living in the property. If you’re buying as investment property, you have to consider, okay, are you both on the title? So you both gain benefits and assets ownership. But from a financial point of view, this can be a little bit tricky because a lot of the lenders I deal with, because it’s an Australian expat policy, they will consider a non-resident, as a non-resident loan. So a lot of the lenders do not lend currently to non-residents. So it kind of falls outside the Australian expat policy.

Jeremy Harper:                 So if you need the income of the non-resident for servicing purposes, then we might need to go down the pathway of potentially have what we call non-resident lending. So, yes, I’ve still got lenders who do it. It’s not at the same investment rates that we can get for Australian expats. So there’s a bit of a difference here. What you can look at doing is can we get the loan to service just on the Australian expat’s income alone, and make some exemptions around? Yes, the foreign national work so they can take care of their own expenses. So we’re essentially discounting the expenses for that overall application. So it can be a little bit tricky. But the easiest, I guess, least resistance will be trying to get the loan to service just on the Australian expat’s income.

James Ridley:                     Yeah. Okay. And this is a bit of a curly one that I thought I’d throw in. If I’m not purchasing, and my intention is to move back to Australia or emigrating to Australia, I’m a foreign citizen, is there a way that I can actually purchase a future main residence? I’ve got no history there, I’m in the process of getting a tax file number. Is that a similar case where I’d have to go online, check out FIRB, see what kind of exemptions would apply and see whether they’d be happy servicing me.

Jeremy Harper:                 So would this be moving back with an Australian citizen, you’d say?

James Ridley:                     No, this is purely just a foreign citizen. So say a U.S. citizen moving to Australia. They want to buy a property. Is it likely that they’ll be able to get a loan here in Australia or probably not?

Jeremy Harper:                 Yeah, it’s a good question. So I guess a good point to make is obviously the lenders will look at are you a resident or not. Basically the test is, do you have an Australian passport or citizenship?

James Ridley:                     Yeah.

Jeremy Harper:                 Now if you don’t, the next level down is obviously, visa, a temporary or a permanent visa, what’s the visa you have? Now, if you’re not physically in Australia, and you don’t have an Australian passport, so you’re a non-citizen, from lending point of view, you fall under a non-resident lending, you potentially can get a loan, you just have to pay a higher rate and fees. So you probably better off in that circumstance to wait till you actually physically in Australia-

James Ridley:                     In Australia, yeah.

Jeremy Harper:                 … we can present to the broker, or the bank, “We’ve got these type of visa.” And provided the visa that they have is, the main or permanent visa, shows your intention to be living in Australia in long term, it’s not a temporary visa, then you should be able to classify under normal lending laws.

 

How Do Banks Treat the Foreign Exchange Risk When Lending to Australian Expats?

 

James Ridley:                     Okay. Now, that’s important consideration. You’ve given us a good run down there. As we progress forward again, next slide. It’s huge. It’s a big important factor that Australian expats need to be aware of, and it’s foreign currency risks, or as we’ve got the FX risk.

Jeremy Harper:                 Yeah.

James Ridley:                     So you’ve mentioned it previously, already, when you engage a provider. And I just want to flesh that out a bit, you know, how does FX risk play into getting a mortgage? And I suppose, is there a situation where a lender, if they know that you’re in the U.S. and the U.S. dollar starts to go backwards, and the Australian dollar goes back up to say, “80, 90, 95%, who knows?” How can that play into this? If I’ve already got a mortgage or getting a mortgage. What are those sort of factors I think about?

Jeremy Harper:                 Good question. So I guess, the first thing is the repayments of the mortgage.

James Ridley:                     Yes.

Jeremy Harper:                 Will always be coming from this Australian bank account. So if we get you a loan with lender A unless you’ve got an established bank account in Australia, that you want the direct debits, let’s say you’re making monthly repayments on the mortgage, it will come from that bank account. Otherwise, establishing a new each time bank account with that lender, you have the mortgage, the loan, plus the bank account. So the rate payments always going to come out in Australian bank account. And depending on what you nominate, it’s going to be, maybe on the 15th of every month, and that’s the repayment for AUD 1800, always going to be Australian dollars. And from a bank point of view their assumption is that as per the contract the repayment is going to be in Australian dollars, and it’s going to be a fixed amount amortised over 30 years. So regardless of what’s happening with FX outside of Australia, they’re only really concerned about you making that 1800 dollar repayment every month in Australian dollars.

James Ridley:                     Yeah. Okay.

Jeremy Harper:                 So, some things to consider is obviously, looking at an offset account, will be one tool you can think about. And that is, if you have funds overseas, and you can wait for the… Let’s just say, the Australian dollar’s weak and you’ve got U.S. dollars, the AUD drops, you might say, “Okay, now’s the time to move funds across at the spot rate at that day, and park those funds in your offset account.” So the offset accounts going to reduce the interest charge when your mortgage, at least that way you’ve locked in, essentially that FX at that date of transferring to Australia.

Jeremy Harper:                 The next thing to consider is maybe looking at a fixed loan where you lock in the interest rate. So you have one variable that’s not going to move, and then you understand that that’s going to be my monthly repayment for the next two, three years. And that’s not going to change. Again, the only thing you need to think about is the FX over that period.

James Ridley:                     Yeah.

Jeremy Harper:                 In terms of, how the banks would view it, that comes back to when assessing the application, during that 20% discount. That’s them doing a bit of a risk and say, “Okay, if there’s movement overseas, we can at least factor that even when we’re assessing, can they afford the loan up front?”

James Ridley:                     Yeah, okay. No, that’s a good clean layout. I think, forward looking, I suppose one thing that could sort of change the way the currency goes at the moment, especially talking about the U.S. dollar, obviously, you got the Trump trade war, and then election next year as well on the U.S. side. So it’s going to be interesting to see what happens there. And then, that last point that I sort of put in there is hedging. And as far as that, that sort of refers to maybe potentially looking in a forward rate with a currency platform. I’m not sure how long you can lock those rates in. I’m not sure if you ever come across that, how long can you actually put them through?

Jeremy Harper:                 Yeah. Look, all I know, is, and this is outside of my scope, I just know, the longer the contract, the more expensive the premium is going to be. So that’s just something you have to weigh up in terms of, are you happy to take the risk of a future FX movement, versus the cost of entering the contract?

 

How Does a Banks Lending Policy Affect Australian Expats When Selecting a Mortgage?

 

James Ridley:                     Yeah, okay. No, and I mean, common platforms that we hear of people using, OFX, Transferwise, Worldfirst I think a big one as well. So those are some of the things that obviously want me doing bank to bank transfers. We usually get not the best rate, we incur some transaction fees as well, which is never nice. Moving forward, obviously, this is pretty important, but I think this is more so one that applies to you as a broker, and you’re doing the right thing by your client trying to find that right mortgage in the options for that recommendation. So a lender policy so what is meant by a lender policy? Just give us a bit of a rundown. Everyone’s different, obviously.

Jeremy Harper:                 Correct. Yes, sir. It’s a fluid lender policy, they’re fluid. They’re changing weekly. I’m getting update emails from five different lenders saying, “We’re doing this, we’re not doing this. We make this harder. We make this easier.” A lot of that doesn’t really impact Australian expats, because they’re always under harder scrutiny in terms of their policy. But it’s really how in particular bank will treat that Australian expat and their customer profile.

James Ridley:                     Yeah.

Jeremy Harper:                 To give an example, I won’t mention the name, but I had a lender that was mid tier lender that it months ago, they just send an email to us saying, “We’re no longer dealing in foreign currency.” So they just completely removed themselves altogether. That’s kind of what we mean by lender policy and just how they treat that. And what I’ll talk about in second is how lender policy impacts securities and locations as well.

James Ridley:                     Yeah, yeah. Okay. That example, I think you mentioned, I remember you telling if a person was in Dubai, they earned 200,000 plus U.S. dollar equivalent, and one lender was happy saying that, “Yeah, listen, based on your assets, based on your income, we can lend you approximately 2.1 million.” And then, another lender said, “Oh, actually we are only comfortable lending 1.1.”

Jeremy Harper:                 Yeah.

James Ridley:                     So a huge difference there. It just goes to show depending on the lenders.

Jeremy Harper:                 Correct Yes. Yeah. And I think that came down to one lender using an Australian tax rate for servicing, the other was happy to look at their tax free income.

James Ridley:                     Yeah. Okay. I mean, you mentioned location security types before then. And what do you mean by that? From a bank’s point of view when they’re considering lending to someone?

Jeremy Harper:                 Sure. There’s two. And this is where it gets a little bit tricky. Because we might get a client pre-approved, let’s say, going back to our example of a half million dollar property we are looking for. The second thing to think about is location security. So this has been really under the microscope with all lenders. They’re looking at their internal book, what they’re currently got in terms of stock on their loan book. And number one, they don’t have too much exposure to location, so postcode, so in a highly dense areas, so maybe it’s the CBD of Sydney they might say, “Okay, we’re happy to lend you an 80% for a half million dollar property, but, because of the postcode we’re only going to do 60% because we want to reduce our risk appetite within that area.”

Jeremy Harper:                 So, small apartments, something under 40 square metres can cause issues. And even on the other spectrum might be, a large homestead or small farm, because I do see what Australian expats, they’ve had their time overseas. They’ve grown up in New South Wales, Queensland, Victoria. And they do like the idea of that sort of sea change or going out to the country having an actual homestead, a little bit of a farm. They can be quite tricky to get financing. Lenders will categorise them and say, “Just due to the population, due to where it’s located, there’s not enough turnover. So we actually won’t lend against that type of security or we’ll only do a 50%.” So if that’s something that you are looking at you’ll have to be prepared , yes, you could afford the loan, but the lenders are not going to actually provide the funding because of the security that you’re actually looking at.

James Ridley:                     Yeah. Can imagine that location and security, that’d be a big insurance probably been a big issue over the last 18 months. We look at a lot of CBD’s. There’s been negative double digit returns reported, and I suppose from when you consider a loan to value ratio from a bank’s point of view, they might have already been over sort of leverage in that particular suburb. And that’s why they’re like, you know what, “Too much risk. We’re not going to do it.”

Jeremy Harper:                 Yes. And so what I would say is, once you’ve done a credit assessment, is, “Let me know, number one, what’s the type of property you’re looking at and the postcode or the area you’re looking at?” Because a lot of people have no idea where I want to buy, and sometimes people have very specific idea, “Okay, I want to buy in these certain postcodes. What I can do as part of the research is a lot of lenders allow you to like a postcode look up and see, do they have any specific restrictions on that area? So I can also do that as part of my research.

James Ridley:                     Okay. Now, that’s great, especially considering, you know, as you said, pre-approvals first. Then you find the property as part of pre-approval, you can say where you’re looking? What suburb you going to have a look? Based on what you can borrow, this is what you open to but that lender is not going to touch you, and that’s sort of scenario.

Jeremy Harper:                 Yeah.

 

Does an Australian Expat Have a Credit Score?

 

James Ridley:                     So that’s really handy. That’s good to know. Moving on. Number seven, listen, I’ll be honest, I was shocked that we had these in Australia. I know we had some score, but it’s not like we living in the U.S. now. But credit score?

Jeremy Harper:                 Yeah.

James Ridley:                     Tell me a bit more about these, because they must have bought them recently?

Jeremy Harper:                 Yeah. So it’s called comprehensive credit reporting, which just came out just recently, and all the big four have had signed on. And I believe it was October this year, the second part of the data. So if you go and run your credit score, today, tomorrow, you’ll be able to see 24 months history of credit facilities, and we’ll have a series of numbers and lenders. So it will tell the lender, “Okay, here’s a credit card you’ve had open last four years. Here’s the monthly reporting on the last 24 months.” And it I’ll tell you if you’re overdue or on time.

Jeremy Harper:                 So what it’s doing now is giving lenders a better history. A bigger resume of all the potential borrower to see what they like with their credit. And so, it’s really important to understand where you sit in terms of credit score, and there’s plenty of services out there you can use for free. NAB this week launched a really cool tool, you have to be based in Australia as written in the terms of conditions. But you can go on there and sign up for an account, and it I’ll show your credit score and actually how to improve it. But just things to keep in mind is obviously, if you’ve been overseas for a while, run the credit just to see what the score is. And if there’s anything outstanding, was there a telephone bill from five years ago that you just thought, “Don’t worry about it,” and now it’s on your credit file, that would an issue. You better off kind of addressing those issues before you actually going towards the application.

James Ridley:                     Yeah. This might be a question, you might not be able to answer it because it might be bit out of your scope. But do you know what kind of things do get recorded on the credit score? Obviously, paying bills on time, that’s pretty crucial. Repayments on mortgages and credit cards, again, pretty crucial. What about someone missing a rent payments, or something ad hoc like that?

Jeremy Harper:                 No. I don’t think rent’s recorded, but every time you make an inquiry for your credit, so it could be a mortgage, it could be a credit card, car loan, that specific financing will make inquiry. Provide you assigned privacy declaration, so that will show up. And then they’ll have a history of how many inquiries you’ve made. So sometimes we see, a person’s going for mortgage and they’ve made 15 inquiries for that top of finance over the last eight months. That will actually impact the score. And depending on the lender that they’re going with, some will have an internal algorithm where they’ll go, “Okay, if it’s under the score, and there’s a bunch of other factors will automatically decline that application.” They might be a good borrower, but because they’ve made a lot of inquiries. Other things credit cards, personal loans, car loans, payday lending, whether we inquire about finance will be on there. And again, if you’ve had outstanding rates notices or telephone bills or utilities that can get put on there if they’ve been chasing you up and they’ve been passed on that case to a collection agency.

James Ridley:                     Yeah. I think that’s a really big one, the credit score, obviously, a lot of people wouldn’t think about that. I didn’t even know we had those sort of things. I know, obviously, lenders that can request your previous history, but I didn’t think we had actual score. So be interesting reading up on that and how that’s interpreted, especially from a lenders. But that’s an important point you make and I guarantee that most Australian expats might be aware of that, some of them might not even have it, just because it’s only just been brought in moving to the U.S. system, but that’s interesting.

 

What Is The Difference Between a Offset Account and a Redraw Account?

 

James Ridley:                     Moving on, let’s talk about number eight, offset versus a redraw. And this is a question I get a lot, from a lot of clients whenever I’m discussing their circumstances about cash, investable assets. Where their mortgages are, it’s always receiving some sort of information and then going back and sort educating on them difference. So, I just would love, if you could give me a bit of a rundown of the difference between an offset and a redraw facility.

Jeremy Harper:                 Yes, sure. So, I guess, to think about an offset account, imagine just as a bank account. It’s got a BSB and a account number. So it sits separately from the loan. Depending on most lenders will allow you call fully transactional. So you can log on to internet banking, you’ll have a debit card to access it. So if you’re in Australia, and you go to the ATM, and that’s with the bank, you can take cash out. You can get pay come into it, BPay out of it. So it’s fully transactional. And the idea around that is, let’s say, you’ve got a mortgage with that lender for 500,000. But you’ve got $50,000 Australian sitting in the offset account, the interest charged will be on the net borrowings of the 450, because that’s linked against the account.

Jeremy Harper:                 So when you log on to your internet banking, you have your loan, and then you have your offset account underneath. And so, for an Australian expat something a really valuable tool, because obviously, that will receipt your foreign transactions in, your money coming from abroad. And you can then, also, when you actually come back to Australia, obviously you can use it for other uses as well. Its quarantine from the loans, that’s quite important.

James Ridley:                     Yeah.

Jeremy Harper:                 Now, when you’re talking about a redraw facility, this is when, let’s say it’s a 400,000 dollar loan. The rate payments over 30 years, because that’s general amortisation on the loan contract its $2,000 a month pre-payments. But you’ve been a good saver and you’re repaying $3,000 a month. So what you’ll do over time is build up your redraw facility. So if you log into your bank, and you look at the loan, you might have balance of 360 and then, you might have a number next to it, might be called balance available, or redraw available depending on the lender how they actually labelled it of $2,000. So what the lender is saying, you can go in and redraw the $10,000, against that loan, because you’re ahead of your payments, you’ve built up a little bit of a credit account against them.

Jeremy Harper:                 So that’s the difference. Two, if you want to figure out which product you had, a redraw facility is going to be part of the loan. So you only have one bank account, yeah.

James Ridley:                     Correct. Yeah, okay,

Jeremy Harper:                 And which ones preferred and why? Well, I guess it will come down to their circumstances. But if they want to use the funds for private use, or for tax use down the track, you really want to keep an offset account. This is a great goal, because then you can muddy up the two counts.

James Ridley:                     Yeah, absolutely. I think that’s a big important one. Too often do I see that Australian expats, they thought it was an offset account, but it’s actually just a regular account. And I say to them, “Well, technically you can pull those funds out. But if you pull those funds out, technically, you can’t claim the interest expense increase, because it’s just pulled from the balance, and it just means you’re ahead of your payments.” You compare that to an offset account. Because an offset account is a separate account, you’ve got the original balance of the loan, that if you pull the funds out of the offset account, yeah, I mean, the interest expense goes back up, but it’s still a tax deduction against that investment, which is really beneficial from a non-resident point of view. So whenever considering an offset versus a redraw consider your circumstances and obviously, again, speak to a specialist that has an understanding of the particular niche that you’re in Australian expats. So that’s really an important.

 

How May A Valuation Impact an Australian Expat Getting a Mortgage?

 

James Ridley:                     Moving forward on to bank evaluations, number nine, a big one. And pretty important, because I’ve seen clients go through this before as well and how can be treated differently on multiple sides. So, if you can give us a bit of an understanding of how may evaluation for multiple parties impact an Australian expat getting a mortgage.

Jeremy Harper:                 Yeah, sure. So, with a bank valuation, well, there’s three general valuations. There’s AVM which is the automated valuation, which could be, if an Australian expat’s just looking to do a dollar for dollar refinance, we can save him some money. We can do an AVM which is, us going in on the computer, running the back end data and from there that will pull out like-for-like sales within the area of a similar stock and that will return automated valuation. Now, depending on the LVR and the total borrowings versus that security, that might be enough to get the application through the formal approval, because we can go, “Okay, yes, the valuation came in at 500,000, the LVR after the refinances is 50%, that’s fine. Off we go.

Jeremy Harper:                 There’s the other ones called a curbside valuation, which is where valuer will go out and drive by the location and make sure that the security is there. It’s free standing. It’s per the contract and they’ll return a valuation, which is generally in line with the contract of sale. And then the third is a full valuation where the valuer will go out to the property. They’ll take pictures of the inside and outside. They’ll do a full report. They’ll pull up three like-for-like sales within the area. And then, they’ll come back and return a value based on their appraised opinion.

Jeremy Harper:                 Now, what I would say about that, yes, we’re saying with particularly around apartments that are just coming on the market, that you can see shortfall valuations. So that might be, you’ve signed a contract for $500,000 the valuations been done. The value is come back and said it’s worth 480. So that’s where you get a shortfall, and that means the bank is only going to lend on the 480 value. So the clients going to have to come up with the shortfall and funds to ensure that will actually settle.

Jeremy Harper:                 The other option can be, and I guess, this is really important to note. It’s not the bank going out and doing the valuation. They are basically subcontracting a valuation company. It’s local to that security area. It’s just their opinion. Now, I don’t want to cross off any valuers, but that is their opinion of what that property is worth. Working as a broker, we can go and engage another valuer for another bank from a different company. And we can get that up to go out there and say, “Okay, you go out there and value what you think the property’s worth.” Quite often, because it’s two human beings, doing two reports, the results are going to be different. And that could be for a number of reasons.

Jeremy Harper:                 And the third thing to consider is, if it’s completely out of line, we have seen it’s very hard, a broker can challenge it and say, “Okay, you’ve come back and you said the property’s worth 480. But he’s three like-for-like sales that are similar in size.” So it might be a three or four bedroom, two bathroom, similar land size. “They’ve been sold in last three, six months, we actually believe it’s worth $500,000.” And sometimes the valuer will take that onboard and go, “Actually, now we see where you are coming from. We will revise that $500,000,” and the bank can accept that from a valuation point of view.

James Ridley:                     Yeah. So a summary from that is that, even sometimes when you get an unfavourable valuation, whether you’re refinancing your current property or looking to purchase a new one, it can pay to invest maybe a few hundred dollars in getting that other valuation?

Jeremy Harper:                 Yeah. So with that, we’ve got some tools. So first, I’ve got RP data, which is a professional login. And so what I’d like to do is, “Okay, what’s the address?” I’ll run a report. If it’s in an area where there’s a lot of sales, it can be quite an accurate number gets returned. So we can do that up front and go, “Okay, where we see in terms of LVR for refinance,” to kind of understand, is there actually a deal there? Because if I do a RP Data report, and you’ve only got 10% equity in that property, we’re probably not going to be able to help you with a refinance. It will be more… We can go and order some valuations, but that might be a bit of a time wasting exercise for everyone.

James Ridley:                     Yep. Yeah, of course. I mean, and that last point I’ll put there, we’ve actually already talked about this one about security type having any impact here, especially where the lenders are willing to lend on that suburb, that farm and valuations, whilst they might come back favourably the lenders seem to maybe see there’s inherent risks associated with that farm or that suburb on the lend.

Jeremy Harper:                 Correct. And just further on that, it’s not just the policy, it can also be the credit assessment that picks up the valuation report. So I had a client where they had a jetty, and the credit team said, “We’ll, just because of that, we don’t think that’s something that could get resold as quickly on the market. So we’re actually going to reduce how much we can lend against that security.” The valuation stepped up with what the contract said, but just because they felt that was a risk factor, they reduce the LVR they could lend by another 10%.

James Ridley:                     Yeah, okay. Well, 10% that’s huge. Okay. No, that’s really interesting. With that bank valuations, do you find that, they can be conservative? They apply maybe a 5% margin of decline in error there? So compared to what you might think it is worth at realestate.com?

Jeremy Harper:                 Yeah. I think sometimes, when you look at realestate.com, it is a lead generation tool. So just keep that in mind that they might, they might be telling you to higher value to get engaged with them. That’s something you just need to be mindful of. But in saying that the valuers is meant to be independent? They’ve got a variety of banks that they’ll do the valuations for, so really, they shouldn’t be under any obligation to have a lower valuation. But in saying that, potentially, that could happen. We don’t know what happens behind the scenes.

 

Can the Purpose of the Property Purchase Impact a Mortgage Application for an Australian Expat?

 

James Ridley:                     Yeah. That’s right. Okay. Well, the last item that I want to touch base on today, number 10, purpose of property purchase, and whether this has an impact on whether a lender is going to give us those funds? So as we can see here, I’ll put a few points. The purpose of the property purchase, are for main residence, investment, knock down/rebuild. Can these factors hinder us, as Australian expats to obtain a mortgage?

Jeremy Harper:                 Yep. I guess the first one, the way you present, it comes down to your current financial circumstances, and then within the next 12 months, what you’re going to be doing. If your intention’s to purchase and then move in, so obviously, the bank really be concerned about, “Okay, well, if we’re trying to assess on overseas income, what’s your job income going to be, when you move back to Australia? Are you going to take that same role and going to work from that?” Let’s say you moving Sydney. “Okay, show us some sort of correspondence,” to give the bank comfort around that type of scenario.

Jeremy Harper:                 With the second one, investment. So that’s fine in terms of purchasing. There’s two things we just need to consider is obviously, the rental income coming off that Australian purchase we can use. That will come off the valuation report or perhaps an appraisal from a real estate agent saying, “Yes, this property is currently tenanted. It’s currently getting four hundred dollars a week. We can use that for income purposes. The banks again, we’ll take the gross rental income, and will shave it down to 70, 80%. And that’s really just on their end, being conservative and taking into factors like vacancies, and some of the ongoing management fees, you’ll pay the real estate agent. And they’ll just take it and the net for servicing.

James Ridley:                     Yeah.

Jeremy Harper:                 The third one’s, quite tricky, to be honest. Even if someone’s based in Australia, what you’re seeing is to go through a build and particularly if you’re not buying a house and land package through a registered builder and you’re going down that pathway with a fixed bill contract, but if you’ve got a property existing somewhere out of Sydney, it’s got all the house new or knock it down, put a new house on it and go through that process. To get funding, it’s extremely difficult just to kind of set expectations, because the lender is really concerned about their security.

Jeremy Harper:                 So if something happened halfway through build and that lenders got security on that title, it’s not really great for them to resell on the market. So what we’ve been looking at with a few scenarios is, okay, if a client has another property, so they’ve got two properties. And then their got equity on the second property cashing out against that property and using those funds and they control the build. So instead of going down the pathway of fixed bill contract, where you make progress payments to the builder, you have cashed out three hundred thousand dollars. And you pop those funds into account. And once you’ve done this stage of the building, you pay the invoices as you go. That way the bank’s happy because they’ve got an actual existing security that if anything went wrong, and they needed recourse on that property, it’s already built, and then you’re left with their unencumbered property, which you have halfway to rebuild. So you’re wearing the risk.

James Ridley:                     Yeah. Okay. That’s interesting. I know some clients, they do have that intention that they bought a property. i’ll treat it as a investment property for the time. And then, eventually, when they return back to Australia, they’ll look at potentially refinancing and get a construction loan.

Jeremy Harper:                 Yeah.

James Ridley:                     And then, go down the process of redeveloping it. That common thing that people do these days is build a duplex or town houses, and try and make that additional profit, which is risky in itself. So that’s very interesting to get that sort of insight into it. So that’s good, but let’s move forward. So just going to head over the next slide. We are going to do questions. Got quite a few that I want to run through, but we’re going to actually do it on our Aussie Expat Podcast. So that’ll be up on a separate link. And will include the links obviously, underneath this YouTube video that will eventually go up there. And then lastly, just touching on our contact details if you have any questions.

James Ridley:                     So firstly, Jeremy Harper, best contact details [email protected] Or I believe, you can book in a consult with him. Is that right on your website?

Jeremy Harper:                 That’s right. Yes, yes. There’s a contact button and there’s also some contact forms down below. And then on Australian expat landing page, and then read about.

James Ridley:                     Yep. Okay. Amazing. So as you can see there, www.hfinance.com.au pretty clear. And then lastly, obviously, our contact details. Any questions, queries, [email protected] Or visit our website for more information, www.atlaswealth.com.

James Ridley:                     Okay, guys, well, thanks for your time today. Obviously, as I said, we’re going to be answering some questions very shortly on our Aussie Expat Podcast. Head over there to listen more, and thanks for your time.

Jeremy Harper:                 Perfect. Thank you James.

James Ridley:                     No worries man. Thank you.

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