Securing a Home Loan as an Australian Expat – Owning a piece of property in Australia is a dream for many, even if they’re miles away on foreign shores.
As an Australian expat, the opportunity to buy property with a home loan or refinance an existing loan in Australia is available, albeit with some unique considerations.
Who Can Apply?
Australian expats can apply for a home loan or even refinance an existing loan if they meet certain criteria:
- A significant, stable income and a clear credit history.
- Self-employed individuals who intend to borrow no more than 80% of the property’s value.
Currency Considerations
The currency of your income plays a pivotal role in loan decisions. Lenders factor in exchange rates to assess your borrowing capability.
The more potent the currency compared to the Australian dollar, the better your chances. Here are some commonly accepted currencies:
- Top-tier Currencies (Higher Chance of Approval): USD, GBP, Euro, SGD, CAD, HKD, JPY, CHF, NZD.
- Mid-tier Currencies (May Have Restrictions): AED, SAR, BHD, BND, DKK, FJD, INR, IDR, and more.
The fluctuating nature of currency exchange rates means that lenders might adopt a cautious approach, applying buffers to protect against unfavorable shifts.
Interest Rates
Some lenders might offer interest rate discounts for expats, while others may charge standard rates. Ensure you’re not paying above the standard rate for Australian home loans.
In some cases, especially if you cannot provide clear evidence of income, lenders may apply a higher interest rate.
Deposits and Fees
Most lenders will require expats to have saved at least 5%-20% of the home’s cost. In addition to the deposit, be prepared to cover associated fees like stamp duty.
If you have familial ties in Australia, you may also qualify for a guarantor loan.
Loans with Non-Citizens
If you’re looking to secure a loan with a non-Australian citizen, it may be more complex. Some lenders could assess both applicants as foreign investors, potentially leading to government restrictions, larger deposits, and higher interest rates. Providing clear income evidence and valid work visas can simplify the process.
Multiple Currencies and Exchange Rates
If you’re earning in multiple currencies, lenders might factor each currency’s strength against the Australian dollar. A weaker currency might reduce your borrowing potential.
Lenders will also consider tax implications, foreign debts, and any potential negative gearing benefits.
Self-Employed Expat Applicants
Self-employed individuals may find the process a tad more challenging. While many lenders hesitate to consider foreign income from self-employed individuals, those who do might request:
- Six months of bank statements.
- A letter from your accountant.
- Business and personal tax returns from the last two years.
- Relevant Notice of Assessment.
- Assignment of a Power of Attorney (PoA).
The Power of Attorney (PoA) Factor
Some lenders might ask expats to assign PoA to a trusted individual, allowing them to sign documents on the expat’s behalf. This individual could be a relative or a solicitor.
Ensure this person is trustworthy as they will have significant control over your property dealings.
Final Thoughts
While the process may seem intricate, owning property as an Australian expat is feasible. By understanding the nuances, consulting professionals, and leveraging available resources like UNO home loan advisers, you can navigate the complexities and realize your property dreams. Whether for investment, nostalgia, or future planning, the Australian property market awaits its expatriates.