How To Find The Right Expat Mortgage For You In Australia

australia mortgage for expats

Australia is a beautiful land. It becomes difficult to leave once you have tasted the warm weather and feast your eyes on the fantastic wildlife like kangaroos. 

While the experience feels like a dream to many, it is not impossible to settle in Australia. For starters, the country is teeming with expats, and opportunities for settling are immense.

Australia has a vibrant housing market, with many houses waiting for occupants. The mortgage market is accommodating, which implies getting your own home is possible. 

Over the past few years, however, expats in Australia have been experiencing difficulties obtaining a desirable mortgage. 

It means, settling in the country could not be easy after all. For this reason, we have put together this article to point you in the right direction in case you might need a mortgage. 

In this article, we highlight the steps you should follow and the right places, to obtain a desirable mortgage for expats.

What is an expat mortgage?

Expat mortgages are what the name suggests; mortgages designed to facilitate homeownership for expats. 

Not just in Australia but across the world, expats experience difficulties obtaining this facility because of a lack of proper information. 

A lender might be reluctant to engage an expat because of uncertainty around his/her length of stay. If they access mortgages, expats might have to pay punitive rates.

Lessening the barriers to accessing expat mortgage in Australia begins with approaching the right mortgage broker. 

A mortgage broker in Melbourne like this can facilitate access to the mortgages by assessing the loan requirements of the client. Besides, they create a profile of the client’s financial situation. 

Using the profile and the requirements, the brokers identify the right lender whose terms are appropriate to the client. 

Things to consider before applying for expat mortgage in Australia

What’s your Visa status/subclass? 

A mortgage broker can do all the research to ensure that you get the appropriate quote, but getting a mortgage on favorable terms when you do not have an acceptable Visa can be impossible.

Non-resident expats pay more in hidden costs, such as legal fees and loan establishment fees. 

If you are going to buy a property to live, then you can breathe easy because some of these costs may not be applicable. 

The amount you can borrow

Lenders do not have similar terms for mortgages just for competition’s sake. 

Nevertheless, there is consensus that establishes the mortgage amount accessible at about 80% of the property’s value. 

Other factors, such as your visa status, monthly income, creditworthiness, and savings, among others, also affect the mortgage amount you can apply for. 

Your mortgage broker should be able to help clarify such issues so that you have a better experience, facing these hurdles after initiating the borrowing process. 

In which currency do you earn your income?

The denomination of your income is critical to lenders when considering mortgage applications. If, for example, you live in Australia, but your income is in USD, some lenders might reject your application.

The problem lies with the risk in the exchange rates. Changes in the AUD/USD exchange rate might undermine your loan commitments. 

Therefore, the lenders would not want such risks, primarily when it works in your favor.

What do you do then? 

A good mortgage broker will find a lender with the most favorable terms for expats whilst encouraging the client to open an AUD-denominated account. 

Alternatively, you could open an account with a local bank to facilitate transactions. From the account, you should pay any attendant fees and costs without much hassle.  

Deposit requirements

Most Australian lenders require a deposit before approving mortgages. 

Generally, for expats, 20% to 30% is the figure you are likely to part with, but some lenders might be okay with deposits up to 20%. 

Expats pay higher deposits because they do not fall under the Lenders Mortgage Insurance (LMI) scheme. The LMI applies to Australian nationalities. 

The policy of the lender

Lenders treat applications for expat loans differently, depending on prevailing conditions. 

With a broker that understands the mortgage landscape, you should be able to obtain favorable loans despite an unfavorable lender policy.

expats mortage australia

What is the purpose of purchasing property?

Expats are welcome to buy property to let. Buy-to-let arrangements are popular, especially among expats who intend to resettle back home in a short while. 

Some lenders might charge higher interests for expat mortgages enabling buy-to-let schemes.  

Finding the right expat mortgage is just the beginning of the process. 

In addition to these factors for consideration, you must provide supporting documents to facilitate access to the loan. 

A good thing about approaching a broker from the start is that you will get the heads up about the required documents. 

For example, a mortgage broker in Melbourne can assist you if you live within the region. 

Since brokers will come to see you, therefore, there is no need for you to travel to bank branches to seek assistance from far-off places.

Some of the documents you may need to provide include:

  1. Identification documents–your passport should suffice for this requirement. Ensure that the passport is valid and that you have supporting documents at hand if need be. 
  2. Proof of qualification to buy property – in Australia, foreigners must obtain permission from the Foreign Investment Review Board (FIRB) to purchase a property. It is prudent to start with getting FIRB’s nod before initiating the process of an expat mortgage application. Note that FIRB demands a fee to give out the approval.
  3. Proof of legal residence – if you have a valid passport, you should be able to skip this requirement. However, this requirement is dealt with on an issue-by-issue basis. Just ensure you have the proof with you to increase the chances of success. 
  4. Creditworthiness documents–you might need a credit check for this requirement. However, bank statements, proof of wages, and tax returns should sail you past this hurdle. 
  5. Can you service the loan? – It is an obvious requirement since it is in everyone’s interest to see the loan cleared when due. For this purpose, bank statements should suffice. If not, utility bill receipts should provide enough evidence to this end. 

In Closing…

As you can see, it is possible, but tricky, to obtain an Australian expat mortgage. 

Even with a good knowledge of the Australian mortgage landscape, one is better off getting proper advice and guidance. 

Mortgage brokers offer valuable insights and assistance to ensure that you get the best deal.

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