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If you’re an Australian expat, borrowing to purchase a home overseas can be a challenge. Several obstacles can complicate the process, so it’s important to understand them before you explore your options for borrowing and buying property in Oz.
Foreign income may be assessed differently
One of the challenges lenders face is accurately assessing income earned overseas. Fluctuations in currencies, different tax systems, and varying employment standards can all impact borrowing capacity. From the banks’ perspective, it’s all about assessing risk, and they may apply significant discounts to foreign income to reduce that risk.
Currency exchange rates create uncertainty
Currency fluctuations can affect the value of income and savings expats may have in foreign currencies. From a lender’s point of view, these changes can influence the ability to service a loan, adding an element of financial uncertainty to the borrowing process.
Expats face stricter lending criteria
Most Australian banks have stricter lending criteria for expatriates than for residents. This can include higher deposit requirements, a more comprehensive income verification process, and additional documentation to ensure income stability and reliability. This is where a mortgage broker with expertise in expat lending can provide value to borrowers. They can offer guidance to ensure that an expat has the right documentation to improve their chances of loan approval.
Getting a loan is not always easy
Not all Australian financial institutions offer home loans to expatriates, which limits options for competitive interest rates and favourable loan terms. This can make securing a suitable loan more difficult, requiring expatriates to conduct thorough research or enlist the help of a mortgage broker specialising in expatriate services.
Accessing a credit history might be difficult
A borrower’s credit history is critical for securing a loan, but this can be challenging if you’ve lived overseas for an extended period. Finding a lender willing to offer favourable loan terms can be tough without a recent Australian credit history.
While purchasing property in Australia as an expatriate can be challenging, careful planning and the right advice from an expat lending specialist can help overcome these obstacles, guide borrowers through the complexities of the process, and ultimately lead to a successful and more seamless property purchase.
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Alfred Moller, Head of Residential Expat Lending, Asia-Pacific Region
Alfred specialises in lending to Australian expats living overseas and is head of residential expat lending for the Asia Pacific region.
