Expat Home Loans in Australia
Australian Citizens living overseas looking to buy property back in Australia often find it difficult to get the right answers. This article answers the 7 most frequently asked questions asked by Australian Expats looking for a home loan.
1) Is it possible to get a home loan as an Australian Citizen living abroad (Australian expat home loan)?
Absolutely! Australians living overseas can get mortgage finance but its not as easy as if they were living in Australia. Not all banks will approve expat home loans and the banks that do generally apply stricter credit criteria.
2) How much deposit do I need for a home loan as an Australian Citizen living abroad?
This is the biggest issue expats have when applying for a home loan. As 80% is the maximum LVR for expats living overseas and therefore a 20% deposit is required.
3) I am an Australian Citizen but my spouse is a foreign citizen. Can I get a home loan with a deposit smaller than 20%?
Yes, whilst the property and home loan could be in both applicants names, only the income from the Australian Citizen would be used when working out borrowing capacity.
4) Can Australian Permanent residents living abroad borrow over 80% LVR (with less than 20% deposit)?
Permanent residents of Australia are treated for home loan purposes as Australian Citizens EXCEPT when they are living overseas. A permanent resident living abroad is treated like a foreign citizen and the maximum LVR available is 80%. Therefore, permanent residents of Australia living overseas require the full 20% deposit for an Expat Home Loan.
5) How do Banks work out my foreign income and determine my borrowing capacity?
There are huge differences on lender policy when it comes to borrowing capacity calculations. The difference in policy can mean as much as $150,000 difference in borrowing capacity between different lenders. Some banks will take your net income (ie, your income you receive in the bank account after tax and deductions), convert this to Australian dollars and then use this tax free amount to work out your borrowing capacity. This option is perfect for those that live tax free countries like the UAE, or low tax countries like HK and Singapore.
Compare this to other lenders that will take your gross income (ie, the amount before tax and deductions), convert this to Australian dollars and then apply Australian tax to the income. Using a lender that takes the net income is best for those earning low tax or tax free income. If you are earning 100k gross or net (its the same because you are paying no tax), some lenders will actually apply Australian tax to the 100k so for borrowing capacity purposes your income would only be $75,000. Using a lender that uses the net income for servicing adds $25,000 to your income significantly increasing your borrowing capacity.
6) Will banks accept a payslip that are in a foreign language?
Banks will not accept payslips that are in a foreign language. Therefore, these payslips need to be translated by a NTAA qualified translator at the applicants expense. Generally the cost is about $20 a page but varies between translators.
7) Is the First Home Owners Grant (FHOG) and stamp duty concessions available to Australian Expats?
The rules for FHOG and stamp duty vary slightly between the States. Speaking generally though, to qualify for these concessions you must have a good credit score and move into the property within 1 year and occupy the property as your principle place of residence for a 6 month period. If you are planning on moving home within the year and living there for 6 months, then you could apply for the FHOG and stamp duty concession on your return. If you do not then the FHOG and concessions are generally not available.
