If you’re an expat looking to buy property in Australia, securing a mortgage might feel daunting. Australia’s mortgage process is well-structured but comes with unique requirements for non-citizens, particularly around visa types, residency status, and lending policies. Here’s what you need to know to navigate the system and secure a home loan as an expat.
Can Expats Secure a Mortgage in Australia?
Yes, expats can get a mortgage in Australia, but eligibility and terms depend on your visa type, income source, and lender policies.
The most significant barriers for expats include proving foreign income, meeting visa requirements, and navigating restrictions set by the Foreign Investment Review Board (FIRB).
Key Barriers and Visa Rules
Visa Types and Eligibility
Your visa status is critical to securing a mortgage. Different lenders may have varying policies, but generally:
Permanent Residents (PR)
Treated similarly to Australian citizens, with access to most loans and standard deposit requirements.
Temporary Visa Holders (e.g. 457, 482, 491)
Eligible, but lenders may require a higher deposit (20-30%) and stricter conditions.
Student Visas and Bridging Visas
Very few lenders approve mortgages for these visa holders unless a significant deposit (40% or more) is provided. A stable income is important for securing a mortgage under this visa.
The preferred visa’s are Interdependency Visa (subclass 310/110 and 826/814) and Spouse / spousal / partner visa (subclass 309/100 and 820/801). There are many others that are accepted and each lender has its own list of eligible visa subclasses, so it’s essential to check before applying.
It’s also worth noting that as a temporary visa holder you will be subject to a
FIRB Approval for Foreigners
If you’re not a permanent resident or citizen, you must apply for approval from the Foreign Investment Review Board (FIRB) before purchasing property in Australia. FIRB primarily approves:
– New or off-the-plan properties.
– Established homes for redevelopment or as a principal place of residence (with conditions).
FIRB applications incur fees, which vary based on the value of the property. As of 2024, fees start at around $14,100 for properties under $1 million.
Deposit Requirements
Lenders are typically cautious with foreign buyers. Most expats need to provide at least:
– 20-30% deposit for temporary visa holders.
– 10-20% deposit for Australian citizens living abroad or PR holders.
If your deposit is less than 20%, you’ll likely need Lenders Mortgage Insurance (LMI), which adds to your costs.
Proving Foreign Income
One of the biggest challenges for expats is verifying foreign income. Lenders may consider your overseas income but will often discount it by 20-40% to account for exchange rate fluctuations and tax differences. To prove income, you’ll need:
– Payslips from your employer.
– Tax returns or income statements.
– Bank statements showing regular salary deposits.
Some lenders only accept income from specific countries or currencies, so check their policies in advance.
Steps to Secure a Mortgage as an Expat
Step 1: Determine Your Borrowing Capacity
Your borrowing capacity depends on your income, debts, visa status, and deposit. Use online mortgage calculators for a rough estimate, but a mortgage broker specialising in expat loans can provide accurate guidance.
Step 2: Get FIRB Approval (if required)
Non-residents must secure FIRB approval before purchasing property. FIRB processing can take several weeks, so factor this into your timeline.
Step 3: Choose a Suitable Lender
Not all Australian banks offer mortgages to expats, so look for lenders that specialise in expat home loans. Major banks like ANZ, CBA, and Westpac have dedicated programs for expat borrowers.
Key points to compare include:
– Deposit requirements.
– Eligibility of foreign income.
– Interest rates and fees.
Step 4: Prepare Your Documentation
Lenders will require comprehensive documentation, including:
– Proof of identity (passport and visa).
– Proof of income (payslips, tax returns).
– Proof of savings (bank statements).
– FIRB approval (if applicable).
– Details of any existing debts (including overseas loans).
Step 5: Pre-Approval and Property Search
Once you’re pre-approved, you can start searching for properties within your budget. Pre-approval gives you confidence and shows sellers that you’re a serious buyer.
Step 6: Secure the Loan and Finalise the Purchase
After finding a property, submit a formal loan application to your lender. Once approved, your lawyer or conveyancer will finalise the purchase, and the property will settle on the agreed date.
Tips for Expats Applying for Mortgages
Use a Mortgage Broker
Brokers familiar with expat home loans can connect you with lenders who accept foreign income and visas.
Save a Larger Deposit
Having a higher deposit (20% or more) increases your chances of approval and avoids Lenders Mortgage Insurance.
Build Your Credit History
If you’re new to Australia, establishing a local credit history (e.g., through an Australian credit card or bills) can help.
Understand Tax Implications
Foreign buyers may face additional property taxes, including higher stamp duty (known as a “foreign buyer surcharge”).
Additional Costs to Consider
When securing a mortgage as an expat, remember to budget for:
Stamp Duty
Varies by state and increases for foreign buyers (e.g., up to 8% in Victoria). Temporary residents and 457 visa holders planning to buy residential property in all states and territories, except for Northern Territory (NT) will have to pay a stamp duty surcharge.
The surcharge varies anywhere between 3% to 8% of the land value depending on the state and can add tens of thousands of dollars to your purchase
FIRB Application Fees
Starting from $14,100 for properties under $1 million.
Legal and Conveyancing Fees
Around $2,000-$3,000.
Property Inspection Fees
Essential for pre-purchase checks.
Ongoing Costs
Council rates, strata fees, and insurance.
Securing a mortgage as an expat in Australia requires careful planning, but it’s entirely achievable with the right guidance. By understanding visa rules, FIRB requirements, and lender policies, you can navigate the process confidently and secure a loan that meets your needs. Whether you’re buying a home to live in or as an investment, Australia’s property market offers great opportunities for expats.
If in doubt, consult a mortgage broker or financial adviser who specialises in expat lending – they can make the journey smoother and help you achieve your property goals Down Under.
