This is effectively a home loan for any Australian expatriates living abroad and in general covers almost all of the loan products available when they are resident in Australia including lender mortgage insured (LMI) home loans.
Application for these home loans doesn’t require the expat to return to Australia and over the past 30 years lenders have become very experienced and dealing with this situation.
These loans are for foreigners identified by the Foreign Investment Review Board (FIRB), who are deemed acceptable to purchase or acquire land to build or develop in Australia while living abroad. There is a somewhat more limited home loan available to these borrowers and generally mortgage insurance is not an option.
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These two types account for tens of billions of dollars in investment per annum and this looks to return again in 2021 2 pre-pandemic levels, and at the end of this page we can provide examples, but for now.
Firstly, you will need to live in a country with a currency that is acceptable to a lender, and many lenders have different rules and policies around which they apply acceptable currencies based on risk.
Secondly, they were up or want to ensure you have the correct type of employment and income and if you are a politically exposed person that will need further investigation. How this income is calculated and converted and on what basis of tax you are domiciled as.
Thirdly, how your credit file looks. If any is available and what any previous credit statements look like relative to your conduct on accounts.
Fourthly, whether your intended purchase comply with any legislative requirements and whether you have Australian representatives such as lawyer, conveyancer, accountants, or financial advisers who are acting on your behalf or giving professional advice. One also needs to take into account the best interest duty or BID, which is a newly enacted legislation in 2021 that mandates broker to make sure that their loan is the right one for them.
Firstly, the property you intended to buy should meet the FIRB guidelines such that it is either new buildings, vacant land with intention to build, existing property to be demolished and redeveloped, buying as a temporary resident with intention to sell at end of visa. (more here on process)
Secondly, the property developer you’re purchasing from have made an application with the FIRB to register and justify the purchase and that you are aware of the fees required to purchase from the Australian Government. (more here on process).
Thirdly, the basis for the income that will be used to service the loan and does it include the intended rent significantly to meet the servicing of the new line. There can be issues with having the country of origin’s tax returns translated into English. There can also be a number of other requirements by the lender such as whether the person is politically exposed, which requires further investigation by the broker due to BID and the reporting needed to government agencies.
Fourthly, another important thing to consider are the professionals whom the professional broker needs to engage with to ensure the process run smoothly for the purchaser example such as the lawyer or conveyancer, accountants, realtor or agent and any other people acting for the purchaser’s behalf.
There are a number of exceptions to these rules though. For example, if you’re a New Zealand citizen or a permanent Australian resident, or perhaps a foreign national whose spouse is an Australian citizen; then these can be discussed with your broker and advisors
Pre approvals are a very good way of ensuring any future investigations on buying property within Australia are done with confidence that settlement will proceed with ease, and Intellichoice has twenty plus years of experience in dealing with both these client types.
Now, to the examples Australian expat mentioned at the beginning of this page.
This client, not long after achieving their bachelor degree at university, obtained a position with a leading tier-one firm offshore. After spending most of their significant income on travel and experiences, they can see that it would be intelligent to purchase a property in Australia to which they could return one day and because this person wanted to come home to something eventually other than memories. Our client purchased a central Brisbane property in Queensland and had negotiated a good price. They not only made additional payments over and above the rental overachieving, but over the 10-year period had managed to pay off 80% of the purchased property while it was in a rental pool. They consider that given the growth in the property over that period, they had made $400,000 net on their original purchase, this then set them up for a very good lifestyle once returning to live in Australia.
The foreign national purchaser bought property in Melbourne as they were an English national working in Japan as a teacher. Upon making an application to become a resident of Australia, and been accepted, they moved into their Melbourne residence and believed they had netted $300,000 net growth in the property over a four-year period.
Both of these examples exclude tax costs and or benefits were applicable and, in both cases, though, the purchase is believed to have significantly improved their position, thanks to having the access two home loans sourced via our brokers while living abroad.