Home loan lending in Australia has become difficult for Australians abroad and non-Australian citizens, however it’s still possible.
Changing bank policies
Planning to buy property with an Australian mortgage is something Australians have taken for granted over many years. The long-enduring economic growth cycle that Australia has enjoyed, together with a low inflationary and interest-rate environment, has meant a boom in property ownership over the last decade or more.
However since mid-2016 bank lending policies changed in response to government concerns that some foreign buyers were obtaining loans in Australia fraudulently, and so lending standards needed to be tightened.
Over the course of the next 18 months all of Australia’s major lenders dramatically reduced or completely ceased lending to non-Australia residents and/or those with foreign-currency incomes.
The changes have affected both Australian citizens (expats) and non-citizens, and their dreams of owning property, down-under. As a result off-the-plan purchases by foreign investors have become significantly more risky.
There are loans still available, but you need to know where to look. You need to accept that if high-street or the largest banks are not lending then there may be alternatives! – They’re just not so easy to find, and don’t expect all the same home loan terms and conditions including interest rate and upfront fees, that you would find at a high-street lender.
When considering a mortgage and you don’t have Australian residency, first conclude if you are non-Australian whether you are eligible to buy your chosen property, (which needs to be a newly-built property), by contacting the FIRB website. There are additional fees that apply to buy property as a non-Australian.
Thereafter you will need to be wary of the foreign buyer land transfer duty surcharges applying in most States of Australia. These measures were introduced by the Australian government to curb foreign investment.
Australian citizens overseas don’t need FIRB approval, and can purchase any property, however like non-Australians, finding a lender that suits your situation and will lend to you whilst you are earning non-AUD income, is challenging.
Challenges for the Self-employed
Intending borrowers who are self-employed including those contracting their services and earning income that is not in Australian dollars particularly, are struggling to find finance. In the event a bank does have a policy for non-residents (and some do), it’s often a very strict policy, applying to either employees only, or to a narrow, wealthy category of buyer, with hurdles that are difficult to overcome.
These hurdles can include a low lending ratio (60% or less), or the requirement by multinational banks for the borrower to invest in wealth management with the bank more than $100,000 first, before a mortgage can be considered.
Aussie Finance and Property holds an Australian Credit License and operates a niche consultancy designed to access hidden products and alternative lenders that do lend in this area (where the big banks don’t lend) and we have access to a small range of loans for both self-employed and employee situations. For more information, please contact Daniel for an initial assessment of your mortgage eligibility.