Home Loans

Australian expats often move overseas with the goal of taking advantage of both higher wages and lower taxes. For that reason, they want to use their higher income to obtain an expat mortgage in Australia.

The guidelines and Credit Policy for most banks are quite different for Australian expats who are looking to apply for a loan to buy an Australian property and this needs to be taken into account from the outset as it can have a significant impact on your borrowing capacity.

Generally speaking, it’s possible to borrow up to 70-80% of the property’s value and in some circumstances also up to 85% and not pay Lenders Mortgage Insurance (LMI) as an expat.

Currencies

One of the key differences between Aussie expat home loans and loans issued to those currently residing in Australia is that lenders will not accept all foreign currencies.

While all lenders have different policies, generally the main currencies that will be accepted as a form of income include the United States Dollar (USD), Great Britain Pounds Sterling (GBP), Euro (EUR), Singapore Dollar (SGD), Canadian Dollar (CAD), United Arab Emirates Dirham (AED), Hong Kong Dollar (HKD), Japanese Yen (JPY), Swiss Franc (CHF) and the New Zealand Dollar (NZD).

There are other currencies that are accepted, however, you might be forced to borrow at a lower LVR.

Interest Rates

Generally speaking, some lenders don’t offer discounted rates on Aussie expat home loans, however, the actual rate is comparable to most standard home loans and you should be able to obtain the maximum rate discount if you engage a broker that specialises in foreign income loans. Again, this will differ on a case-by-case basis.

As with most lenders, if you are unable to provide standard proof of income you will likely be forced to pay a higher interest rate or be ineligible for a loan

LVR and LMI

Some Aussie expat home loans are available up to a 90% LVR, however, the borrower will be required to pay Lenders Mortgage Insurance (LMI) which can be quite substantial. Alternatively, you may be able to access an 85% LVR loan and not pay any LMI if you meet certain special criteria

Unlike within Australia, where some lenders offer home loans at higher 90% LVRs without the need to pay LMI to certain professions such as Doctors, Accountants or Lawyers, this is not available to expats. If you engage a specialist foreign income broker, they may be able to advise expats living in the UK, USA, Hong Kong, and Singapore on how to obtain a loan as an expat that can be converted to one of these specialised loans when you repatriate back to Australia.

Tax Implications and Currency Fluctuations

It’s important to note that Australia has some of the highest tax rates in the world and different lenders will assess your income based on an Australian tax rate. This can mean your borrowing power is significantly reduced.

Similarly, given the fact that currencies fluctuate in value, many lenders will only accept a certain percentage of your income (60-90%) in a foreign currency to make sure they are protected in the advent of an adverse currency move.

It’s also worth noting that any negative gearing tax benefits won’t be included for Aussie expat home loans when assessing serviceability.

Home Loan Options for First Time Buyers

Many young couples head overseas with the goal of setting themselves up financially and purchasing an investment property that will eventually become their principal place of residence when they return. There are a number of home loan options for first-time buyers who happen to be expats. It’s important to consider the type and nature of your income and you’ll also be unlikely to qualify for the first home buyer exemptions and bonuses as they are predominantly focused on owner-occupied properties, although this can work in certain circumstances.

In this week's Q&A, we will look at what transpired in the NSW state budget concerning the First Home Buyer Choice.

There have been some changes to the NSW property tax system, and it will give first home buyers a choice between paying an annual property tax or stamp duty.

Let's look at factors to consider when making your decision.
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In this week's Q&A we will answer a question from one of our viewers:

"We are looking to buy a property in the Sydney market. We plan to live in it eventually when we return to Australia. Would it be better to purchase the property in 2022 or 2023?

In the current rising interest rate environment that we are in, we have to look at the fundamentals and affordability when looking to purchase property in the Sydney market.

Let's look at the factors to consider to execute your strategy.

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Are you concerned that we are nearing the end of the Australian Financial Year and would like to Learn some STRATEGIES to put in place to SAVE ON YOUR TAX?

Welcome to this week's Q&A!

Yes, we are… YET AGAIN nearing the end of June and for a lot of us and our clients, it's time to get as much information together to learn what options are available..

In this video, we touch on a question that a client has asked.

All individuals have unique situations so we recommend you seek professional advice.

Let's look at what strategies we can utilise to reduce tax potentially.

#aussieinvestor #australiantax #tax2022 #wealth #wealthbuilding #goals #healthyfinances #andrewunterweger #wiseguru #🇦🇺expat #australianabroad #australiansuper #australianpropertyinvestors #tax #taxes #taxrefund #taxreturn #taxtime #taxtips
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In this week's Q&A, we look at what we can do to utilize all the legitimate tax deductions within the asset portfolio.

If you need clarification on your situation, please feel free to contact us.
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