If you’re an Australian living abroad, you might be wondering if it’s possible to apply for a home loan. The answer is yes. Expats can even refinance their existing loans. You will, however, need to meet some strict criteria to gain approval.
You can usually apply for a home loan as an expat under the following circumstances:
This depends on the lender. Some will disqualify you from discounted loans if you live abroad, while others will offer discounts in certain cases.
The key thing to remember is that you shouldn’t pay more than the standard interest rate for an Australian home loan, in most instances. But lenders may up their rates if you can’t prove your income.
The currencies that lenders accept change along with the financial market. Other factors may play a part as well and often lenders’ decisions will vary depending on the circumstances.
was contacted by a man living in Nigeria who had been rejected for a loan by the Commonwealth Bank. He worked for Shell and was based wherever Shell assigned him for work, but was paid in Euros. Because Nigeria is deemed a risky country, the man’s employment was also deemed risky, despite being paid in Euros and paid into a UK bank account. There was no risk currency-wise but CBA was still cautious. So it’s not always clear cut.
You will have a better chance of getting approved on a home loan if you receive your income in the following currencies:
• United States Dollar (USD)
• New Zealand Dollar (NZD)
Other currencies tend to carry restrictions, which depend on the lender. Often, you won’t be able to borrow more than 80% of the value of the home with the following currencies:
• Bahrain Dinar (BHD)
.
In most cases, your deposit must come from genuine savings. But some lenders will accept other funds if you already own an Australian
, or pay a bigger deposit.
You may also qualify for a guarantor loan if your parents own a home in Australia.
will refuse your loan outright if you want to get it with a foreign citizen. Those that will accept you differ in the way they assess your loan application. They may assess you both as Australian citizens or consider both of you to be foreign investors. Some base their decisions on where the highest earner comes from.
Being assessed as a foreign investor creates some issues with borrowing, as you may encounter government restrictions. Also, lenders may only look at a small portion of your income, so you need to pay a larger deposit. Furthermore, you could face a higher interest rate than if you’re assessed as an Australian citizen.
You’ll need to prove your income as well. You should find this easy enough if you have payslips written in English, but many lenders also keep translators on hand for other major languages.
Many lenders also ask you to provide a valid work visa to show you’re allowed to work in the country you currently live in. But you can avoid this if you hold dual-citizenship.
You may earn money in several currencies, especially if you work for an international company. Some lenders will accept both currencies, assuming they are both on the lists above.
But different exchange rates apply to each currency. A currency that trades poorly against the Australian dollar may lower your borrowing potential. Lenders also account for changes in exchange rates while considering your application.
Beyond that, the lender may look at tax rates for the currencies in which you earn, any foreign debts you hold, and the potential for negative gearing.
As a general rule, lenders will use the following criteria when considering your application:
If you’re self-employed, you will likely face even more issues. Many lenders will refuse to accept foreign income from self-employed people. This is due to the complexity involved in working out how much a self-employed person actually earns. It’s much easier for them to work from your payslips and associated documents.
Some lenders will consider self-employed people, though they will usually ask for the following documents:
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