Australia Expat Home Loans in Melbourne
Australian expats in Melbourne have several options for home loans and mortgages. Many banks and private lenders offer products tailored to expats. Break Free Home Loans can help you find the best lender for Australian expat home loans.
Key topics
Key topics
Key topics
What Are Expat Home Loans?
Expat home loans are mortgages that are available to Australian citizens who are living or working outside of Australia. These loans can be used to purchase a property, refinance an existing property to access equity, or consolidate debt.
How Much Can You Borrow For Expat Home Loan In Melbourne
You may be able to borrow up to 80% of the property value for an Australian expat home loan in Melbourne. This is based on the lender’s assessment of your ability to repay the loan, taking into account your income and expenses.
Requirements For The Mortgages
Expat home loans can often be complex, so it’s important to speak to a qualified broker who specialises in expat mortgages. Break Free Home and Commercial Loans brokers will be able to assess your individual circumstances and find an expat home loan that meets your needs.
Deposit Requirement
Australian expats will typically need a 10% deposit plus extra funds to cover their property purchasing costs. This can include stamp duty, legal fees, mortgage set up costs and Lenders Mortgage Insurance (LMI). This deposit must be in the form of genuine savings. However, if you already own real estate in Australia or a larger deposit, you may be able to use your equity as a deposit. Additionally, you can buy a property without a deposit if your parents own a property in Australia and are able to act as a guarantor for your home loan.
Visiting The Australian Embassy
Australian expats who are looking to apply for a home loan have to visit the Australian embassy in order to obtain the necessary paperwork. You may be asked to provide the following documents in order to apply for a home loan:
- A passport
- Australian tax returns
- Proof of employment and income
- Overseas credit reports (if applicable)
- Evidence of savings and investments
You may also be required to have a deposit saved before you can apply for a home loan.
Applying For A Home Loan For Expats Step-By-Step
The paperwork for expat home loans can be complex, so it’s important to speak to a mortgage broker who is experienced in dealing with Australian expats.
Break Free Home and Car Loans offers a team of mortgage brokers who are experienced in helping Australian expats with their home loan applications. We understand the challenges you may face when applying for a home loan as an expat, and we can help make the process as smooth and stress-free as possible.
Application Conditionally Approved
Conditional approval (also known as pre-approval) will allow you to start house shopping. However, you will only receive your funds once you have the final unconditional approval. A conditional loan approval is the next best thing as it’s the highest form of guarantee that a lender can provide prior to formal approval.
To obtain it, you must satisfy a series of conditions. These may include:
- A contract of sale on a property
- A satisfactory property valuation
- The sale and clearing of an existing property loan
- The closure of a credit card
The valid period of a conditional approval will vary from lender to lender, but usually lasts up to 90 days.
Valuations Ordered
Now that you have an Australian home loan conditional approval, what next? Well, pre-approval is not a guaranteed loan. It’s the lender’s way of saying you can borrow your proposed amount based on their current policies, but it’s entirely dependent on your income and circumstances remaining the same. That, and whether you find an acceptable property. This is where your extra valuations come in. These can be ordered when a full approval is at risk of being declined or amended after a pre-approval. Examples include:
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- Change of circumstance compared to pre-approval.
- For instance, the applicant takes out an additional personal loan or credit card since pre-approval or experiences a reduction in income.
- Valuation mismatch.
- If the lender’s valuation of your chosen property is less than the purchase price, they will use the lower valuation amount. This will affect calculations of your maximum loan to value ratio, which may result in a lower loan amount.
- Change of circumstance compared to pre-approval.
Application Formally Approved (Unconditional)
An unconditional loan approval means the lender has accepted the property you found and is satisfied with your financial position. You’re in a position to sign the Contract of Sale with the seller and on your way to settlement.
Loan Documentation
In order to apply for an expat home loan, you will need to provide proof of your Australian citizenship, as well as evidence of your current income and employment. You will also need to satisfy the list of conditions listed in the pre-approval section. It’s lees chance to get approved with no doc for home loans.
The Lender Receives Documents
Your lender will evaluate your financial position, income statements and other assets and equity against your proposed borrowed amount. They may order additional valuations if your circumstances change leading up to the full approval period.
Lender Ready To Settle
You get unconditional approval when your loan has been fully approved. This indicates your application is not subject to any terms and conditions, and the lender finds no issue and is ready to settle. This means they are satisfied with your financial situation, your deposit and Loan To Value Ratio (LVR).
You’ll be asked to sign the loan offer documents which you will receive in about a week of your approval. In this stage, it’s a good idea to get legal advice to check for errors and return the signed documents to the lender as quickly as you can.
Settlement Booked
At this stage, you can make an appointment with the real estate agent. You’ll want to complete a final check of the property to ensure it’s in the same condition when you signed the contract of sale. You can even let your conveyancer attend the settlement meeting on your behalf.
Loan Settled
Further negotiations can result in the lenders reassessing your mortgage application. They may release a new unconditional letter. You can also work with your mortgage broker to organise building insurance in this period. Additionally, you can also apply for grants. This includes the First Home Owners Grant and other concessions you may be eligible for.
How To Prove Your Income For Expat Home Loans In Australia
Proving your income is one of the most common problems expat home loans Australian applicants face. To protect their interests, banks and other financial institutions require extensive documentation to prove you can pay back the amount you’ve borrowed. Many borrowers ask, how can I prove my income? You need to supply the following to lenders:
- Payslips or foreign tax returns in English as evidence for your income
- At least three months of bank statements to show your salary being deposited into your account
- A valid work visa as part of your verification process — this may be waived if you can prove you are a dual citizen or provide other evidence you have permission to work in that country
Solving Problems With Taxes
We get many queries about ongoing taxation requirements of Australian expats who have lived overseas for years. This includes problems surrounding:
- Foreign resident status for tax purposes
- Double taxation issues
- Income tax issues for self-employed expats who are considered higher risk
In general, lenders will apply the Australian tax rates to your income. When many expats work or live in countries with smaller taxes compared to Australia or no taxes at all like the Emirates, this can be a disadvantage.But there are some lenders who will use foreign tax rates to allow you to borrow more. They will only do this if they see the tax withheld from your payslips. This means it’s easier to get the lender to agree to foreign tax rates when you provide as much evidence as possible for your income.
Up Your Borrowing Power
Understanding your borrowing power as an expat is the key to getting a better loan. A variety of factors, not just the Australian tax rate, affect and lower your borrowing power as an expat. Lenders will use a percentage of your income, often 60-90%, after accounting for exchange rate fluctuations and repayments on foreign debts. Banks tend to be more conservative than the market rate. Often, these combined factors result in limited borrowing power for expats as they effectively reduce your listed income on your home loan application. It makes it harder to qualify for a mortgage because it shrinks your income on paper. In order to avoid the Australian tax rate, you’ll have to:
- Find a lender who will accept the foreign tax rate
- Live in one of the countries that qualify
- Show where your tax is withheld on your payslips
Which Currencies Lenders Accept
Different banks accept different currencies. Currency is one of the main factors that affect your ability to qualify when you apply for a mortgage among other general restrictions on Australian mortgages for expats. As the expert on expat and foreign home loans, Break Free Home Loans can advise you on this matter. In general:
- The more common the currency, the more lender options you’ll have.
- Each currency offers different percentages of serviceable income for your loan application.
- Lenders who accept less common currencies (not listed) may pose extra restrictions such as:
- No low deposit loans
- High borrowing standards for income, credit and asset ratios
- LMI payment requirements
- Periodically changing policies
- Right from the start, banks will deduct your foreign currency income by up to 20-30%. They’ll generally only use 70% to 80% of your base income in their serviceability calculations. Only a select few lenders allow you to use 90% of your income. We can help you find the right lender for your loan application for the best terms and borrowing power possible.
The following are the currencies most banks accept from Australian borrowers who live overseas:
- Euro (EUR)
- Great Britain Pound Sterling (GBP)
- Canadian Dollar (CAD)
- United States Dollar (USD)
- New Zealand Dollar (NZD)
- Swiss Franc (CHF)
- Hong Kong Dollar (HKD)
- Singapore Dollar (SGD)
- Japanese Yen (JPY)
- Chinese Renminbi (CNY)
Lenders Which Work With Aussie Expat Home Loans In Melbourne
Are you looking to invest in a home soon and in need of reliable financing? Break Free Home Loans can help you when it comes to an efficient and successful expat home loan application process. Talk to us about your situation. We can help you secure a loan that fits your specific needs as a borrower. The following are just some institutions we regularly work with to assist our clients in Melbourne:
Risks For A Home Loan As An Australian Expat
There are a few risks that come with taking out a home loan as an Australian expat. The most common risk is that you may not be able to meet your repayments if you lose your job or have a change in your income. You may also find it difficult to sell your property if you need to move back to Australia or to another country.
Australian expats who are thinking of taking out a home loan should make sure that they understand the risks involved and speak to a financial advisor before making any decisions.
Need Help? Ask An Expert
Need help on your home or business loan? Lodge your application for an expat home loan with an experienced mortgage broker from Break Free Home, Truck, Pool, Motorbike Loans and more today. We specialise in catering to our client’s specific borrowing needs so they can secure the best deal on their mortgage. Talk to us today or fill in our contact form to get in touch. We can assist you through a step by step process of applying for an expat home loan in Melbourne for a successful outcome.
Frequently Asked Questions
The following are some of our most frequently asked questions:
What Docs Do I Need To Provide For Expat Mortgages In Australia?
The general guidelines and documentation to apply for Aussie expat home loans are as follows:
- Borrowers may be required to provide proof of Australian citizenship in the form of a passport or birth certificate.
- Borrowers must be employed and earning an income in a foreign country.
- Borrowers may be required to provide proof of income in the form of tax returns, payslips or bank statements.
- Borrowers may be required to provide proof of employment in the form of a letter from their employer.
- Borrowers may be required to provide proof of residency in the form of a utility bill or rental agreement.
- Borrowers may be required to provide security for the home loan in the form of property or assets.
- Borrowers may be required to pay lenders mortgage insurance if they are borrowing more than 80% of the property value.
- Borrowers may be required to provide a deposit of at least 5% of the purchase price (this usually falls around 10%).
Can I Get A Mortgage As An Expat?
As an overseas borrower, you are seen as higher risk to banks. It’s why there are more restrictions involved for expat home loans and you are likely to be asked to pay LMI unless you have a large deposit. However, this doesn’t mean you have to pay a higher interest rate when living overseas. Avoiding high rates is something you can do by carefully shopping around for the right lender. Talk to Break Free Home Loans today. We work with specialist expat home loan private lenders who regularly service Australians living abroad.
Can Non Residents Get Mortgage?
While non-residents may be subject to stricter borrowing terms and higher verification requirements to get their loan approved, they can get a mortgage in Australia. Discuss your needs with Break Free Home Loans. We can help you find the right lender and make the most of your situation as a non-resident loan applicant.
How Expats Get A Mortgage In Australia?
- Research your options: It’s important to compare your options in order to find the best deal. Be sure to compare rates and any terms and conditions that may apply.
- Gather required documentation: To apply for an expat home loan, you need to provide proof of your Australian citizenship and evidence of your current income and employment.
- Apply for pre-approval: Once you have compared your options and gathered the required documentation, you can apply for pre-approval from a lender. This will give you an indication of how much you can borrow and will make the home buying process easier.
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