Expat lending specialist at Omniwealth Alfred Moller said expats should understand that just because their bank won’t lend to them, it doesn’t mean all banks won’t.
He said there are seven points expats should think about before applying for a loan.
1. When it comes to lending policies, all banks are different – even the big four banks, NAB, ANZ, Westpac and the Commonwealth Bank.
2. Loan to value ratios (LVRs) can be between 60 and 90 per cent, including lenders mortgage insurance (LMI).
3. Interest rates can also range from 4.5 per cent to 7 per cent depending on the applicant and their requirements.
4. Boutique lenders tend to have more flexible policies when it comes to expats, with some considering self-employed income. However, “there tends to be a 1 per cent risk fee associated with the lender with many restrictions”, Mr Moller said.
5. Expats should think carefully about title ownership when they and a non-Australian citizen partner are looking to purchase. “Implications such as foreign purchaser’s duty, land tax surcharge and FIRB approval are common issues for non-residents,” the specialist explained.
6. Even if your employer covers all your costs, the lender might still consider the minimum household expenditure measure (HEM) for living expenses.
7. Only 50-80 per cent of foreign denominated income is usually accepted, due to associated exchange rate risk.
“It is not always beneficial for an expat/non-resident to apply for an investment loan as not all brokers understand the long-term implications,” Mr Moller added.
“It is highly recommended that expats seek tax advice within their local tax jurisdiction and Australia before making an approach for funding.”