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're addressing an important question from one of our viewers:

"Will the RBA raise interest rates?"

The RBA's steadfast commitment to returning inflation to the target range is a testament to their dedication. The central bank emphasises the need for careful monitoring of economic data to guide future monetary policy decisions, instilling confidence in their actions. 

Looking at the global situation, the RBA highlighted ongoing concerns about excess demand in the economy and elevated cost pressures, particularly in the labour market.

If you have any questions or need personalised advice, please don't hesitate to reach out to us.

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This week's Q&A addresses a crucial inquiry:

"Would it be wise to invest in purchasing my future home now, considering I plan to repatriate to Australia in five years?"

The decision to acquire your future home may prove prudent, given favourable market conditions, sufficient financial means, and alignment with your long-term objectives. However, a comprehensive evaluation of all pertinent factors and consultation with qualified professionals is imperative to facilitate an informed and strategic decision-making process. 

Should you have inquiries or require tailored guidance, please do not hesitate to contact us.

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In this week's Q&A, we're addressing a crucial question from one of our viewers:

"How much do I need to purchase a property in Australia?"

Buying a property in Australia requires meticulous financial planning to cover several key expenses beyond the purchase price. First, you'll need a deposit, which typically ranges from 5% to 20% of the property's value. 

Additionally, stamp duty—a state or territory government tax—can significantly add to the cost, varying by location. Legal and conveyancing fees, usually between AUD 800 and AUD 2,000, are required to transfer the property legally.

If you have any questions or need personalized advice, please don't hesitate to reach out to us.

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May 2024 - Australian Property Markets & Finance data quarterly workshop 

#australianpropertymarket #aussieexpats #interestrates
In this week's Q&A, we're tackling a query from one of our viewers:

"Will I be required to pay 50% more tax on the capital gain from my property sale?"

The Capital Gains Tax Discount, overseen by the Australian Taxation Office (ATO), is a tax concession for individuals, trusts, and complying superannuation funds who sell certain assets and result in a capital gain. This discount effectively reduces the taxable portion of the capital gain, providing relief to taxpayers.

It's essential to remember that tax laws and rates are subject to change over time. Therefore, we strongly advise seeking guidance from a qualified tax professional to obtain the most current information and personalized advice tailored to your circumstances. Should you have any further questions, please feel free to reach out to us.

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In this week's Q&A, we will answer a question from one of our viewers.

"How can I further reduce my monthly mortgage payments?"

You can consider several options to reduce your monthly mortgage payments. One is refinancing to secure a lower interest rate or extending the loan term for more manageable payments spread over a longer period. 

However, it's important to be mindful that adjustable-rate mortgages may offer initial relief but could result in potential interest rate hikes later on.

Therefore, it's crucial to carefully evaluate the long-term impact of each option and consider consulting with a financial advisor or mortgage professional to determine the best course of action based on your circumstances. If you have any questions or need personalized information, please don't hesitate to contact us.

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In this week's Q&A, we will answer a question from one of our viewers.

"How can I use debt recycling to reduce my home loan?"

Debt recycling is a financial strategy where you leverage the equity in your home to invest in income-generating assets. However, it's important to consider the risks involved, such as potential fluctuations in investment returns and interest rates.

Consulting with a financial advisor or mortgage broker can help determine if debt recycling suits your financial goals and circumstances. If you have any questions or need personalized information, please don't hesitate to contact us.

#australia #finance #mortgage #advice #investment #realestate #property #investor #strategy #financialplanning #wealthbuilding #debtfree #growth #debtrecycling #debtreduction #financialfreedom
In this week's Q&A, we will answer a question from one of our viewers.

"Will future interest rates create more opportunity for middle-range income earners to invest in property?"

Lower interest rates generally make borrowing cheaper, potentially increasing accessibility to property investment, but the overall economic environment, housing market conditions, and government policies also impact affordability and investment incentives. 

If you have any questions or need personalized information based on your circumstances, please don't hesitate to contact us.

#australia #economy #finance #investment #realestate #financialplanning #propertyinvestment #home #mortgage #advice #strategy #opportunity #growth #financialfreedom

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