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It’s a common misconception that it’s difficult for expats to borrow money to invest in property back in Australia.
A standard error that many expatriates make is seeking a loan directly from their bank. This often creates challenges when dealing with the major Australian banks – NAB, Westpac, ANZ, and Commonwealth Bank – each of which has its own lending criteria. c
What if your partner isn’t from Australia?
When considering borrowing funds to invest in Australian property, it’s crucial to understand the regulations surrounding foreign investment. You should take into account title ownership and the consequences of seeking joint ownership on any acquisition. For overseas residents (as distinct from expatriates) wanting to purchase property, there are several factors to consider, including foreign purchaser’s duty, land tax surcharges, and the need for FIRM approval. These can introduce additional costs and complexities to the purchasing process.
How do banks assess borrowing power when it comes to expats?
When evaluating foreign earnings banks consider exchange rate risk, typically considering only 50 – 80% of income denominated in foreign currencies. Another frequent challenge is calculating household expenses. Many expatriates have a significant portion of their living costs covered by their employer while residing abroad. However, banks often apply the minimum household expenditure measure (HEM) when determining borrowing capacity. Therefore, it’s essential to seek guidance from an expat lending specialist. They can evaluate your situation and advise you on your chances of obtaining lending approval based on your circumstances.
How can an expat lending specialist help you?
Similar to a conventional mortgage broker, an expat lending specialist can assist you in overcoming the difficulties of investing in real estate while residing abroad. One significant advantage is access to a wider variety of lenders offering more flexible interest rates and borrowing criteria than the major banks. They are more adept at finding the best deals available in the market and – crucially – can help you obtain a loan even if you have previously faced rejections from your bank.
Another advantage is the annual rate reviews conducted by lending specialists to guarantee that you continue to receive the best available deal. It is essential to evaluate any loan every 12 months, especially given the current economic climate and fluctuations in interest rates.
Avenyou Expat Lending offer a complete service to Australian residents living overseas and is ideally placed to help expats navigate the challenges of purchasing property in Australia.
Alfred Moller, Head of Residential Expat Lending, Asia-Pacific Region
Alfred Moller specialises in lending to Australian expats living overseas and is head of residential expat lending for the Asia Pacific region.
