Buying a property is a significant milestone, and for expats moving to Australia, navigating the mortgage process can feel complex. Understanding the basics of how mortgages work in Australia—including eligibility, types of loans, and the application process—will help you make informed decisions as you plan your property purchase. This guide outlines what expats need to know about securing a mortgage in Australia, including key considerations and tips for a smooth experience.

Can Expats Get a Mortgage in Australia?

Yes, expats and non-residents can apply for mortgages in Australia. However, your eligibility and the terms of the loan may vary depending on your residency status:

• Australian Citizens Living Abroad: Typically have similar access to loans as residents.
• Permanent Residents (PR): Treated similarly to citizens by most lenders.
• Temporary Residents: Eligible for mortgages but may face additional restrictions, such as lower loan-to-value ratios (LVRs).
• Non-Residents: Often subject to stricter lending criteria and may require Foreign Investment Review Board (FIRB) approval to purchase property.

Key Mortgage Terms to Understand

1. Loan-to-Value Ratio (LVR)
   The LVR is the percentage of the property’s value that the bank is willing to lend. For example, an 80% LVR means you’ll need a 20% deposit. Expats may face lower LVRs, requiring higher deposits (e.g., 70–80%).
2. Variable vs. Fixed Interest Rates
   • Variable Rate: The interest rate fluctuates with the market, offering flexibility but with potential cost increases.
   • Fixed Rate: The interest rate remains constant for a set period, providing stability but less flexibility.
   • Many lenders offer split loans, combining both fixed and variable components.
3. Offset Accounts
   An offset account is a savings or transaction account linked to your mortgage. The balance in this account reduces the amount of interest you pay on your loan.
4. Loan Term
   Mortgage terms typically range from 25 to 30 years, with options for shorter terms if you prefer faster repayment.

Eligibility Criteria for Expats

Lenders assess expat mortgage applications based on:

1. Income and Employment
   • Steady employment and verifiable income are critical. Lenders prefer borrowers with stable jobs and sufficient income to meet repayment obligations.
   • If you earn income in a foreign currency, some lenders may restrict the percentage considered for your application.
2. Credit History
   A strong credit history in Australia or abroad improves your chances of approval. If you’re new to Australia, see how to build your credit history.
3. Deposit Requirements
   • Expats often need a larger deposit (20–30% of the property’s value) compared to Australian residents.
   • Some lenders may accept a lower deposit if you have guarantors or additional security.
4. Residency Status
   Your visa type can influence your eligibility. For example, Temporary Skilled Worker (Subclass 482) visa holders may face stricter conditions compared to Permanent Residents.
5. FIRB Approval
   Non-residents and temporary visa holders must obtain FIRB approval to buy residential property in Australia. FIRB fees range from AUD $6,350 for properties under $1 million to higher fees for more expensive properties.

Steps to Secure a Mortgage in Australia

1. Assess Your Budget
   Use online calculators to estimate how much you can borrow and afford based on your income, expenses, and deposit.
2. Get Pre-Approval
   Pre-approval gives you an indication of how much you can borrow, helping you focus your property search. This involves submitting income, expense, and identity documents to the lender.
3. Choose the Right Loan
   Select a loan that suits your financial situation, considering factors like interest rates, fees, and repayment options.
4. Submit a Full Application
   Provide detailed financial information, proof of employment, and identity verification. The lender will assess your application and conduct a property valuation.
5. Sign the Mortgage Agreement
   Once approved, review the terms carefully before signing the agreement. Your lender will then arrange the funds for settlement.

Costs to Consider

In addition to your deposit, factor in these costs:

• Stamp Duty: A state-based tax on property purchases, with discounts or exemptions for first-home buyers in some states.
• Lenders Mortgage Insurance (LMI): Applies if your deposit is less than 20% of the property value.
• Legal Fees: Costs for conveyancing and legal advice, typically AUD $800–$2,000.
• FIRB Fees: Required for non-residents or temporary visa holders.
• Inspection Fees: Building and pest inspections, costing AUD $300–$600 each.

Tips for a Smooth Mortgage Process

• Work with an Expat Mortgage Broker: Brokers familiar with expat lending can help you find the best deals and navigate complex requirements.
• Check Currency Restrictions: If your income is in a foreign currency, confirm whether the lender has limitations on eligible currencies.
• Plan for Exchange Rate Fluctuations: Use forward contracts or currency transfer services to manage costs if transferring funds from overseas.
• Start Building Credit Early: Establish an Australian credit history before applying for a mortgage.

Securing a mortgage as an expat in Australia may involve unique challenges, but with the right preparation and guidance, it’s entirely achievable. By understanding eligibility criteria, exploring lender options, and planning for additional costs, you can make confident decisions and take the first step toward owning property in Australia.