If you’re a foreign investor, non-permanent resident, or foreign national planning to buy property in Australia, you might be asking yourself, ‘Can I get a home loan from an Australian lender?’.
The great news is, yes, you can! The process seems difficult as there are specific requirements and restrictions. But with the right guidance, it’s entirely achievable.
And PDCD Homes is here to guide you. We’ll simplify everything you need to know about securing a home loan in Australia as a non-resident. Whether you’re looking to invest, relocate, or build your dream home, we’ll provide you with all the key details to make the home loan process smooth and stress-free.
Let’s get into the details.
Who Can Apply for Non-Resident Home Loans?
Non-resident home loans are available for individuals who meet specific criteria. You can qualify for this type of loan if:
- You are an Australian expat living abroad.
- You are a foreign national who resides outside Australia.
- You hold certain temporary visas while living in Australia.
If you fit into one of these categories, you can be eligible to apply for a non-resident home loan and take a step toward owning property in Australia.
What Are Non-Resident Home Loans?
Non-resident home loans are specially designed for individuals who are not Australian citizens or permanent residents.
Although some Australian banks do offer these loans, non-resident home loans are more commonly provided by non-bank lenders. These are financial institutions not classified as authorised deposit-taking institutions (ADIs). They tend to show more flexibly to the needs of foreign investors and non-residents.
Unlike regular home loans, non-resident mortgages come with stricter requirements and conditions, such as:
- Higher Deposit Requirements – Non-residents are required to provide a larger deposit to secure a loan.
- Proof of Income and Funds – You must demonstrate your financial stability and income, usually in an acceptable currency.
- Higher Interest Rates – Since non-residents are considered higher risk, lenders typically apply a premium to the interest rates on these loans.
- Loan Options – While the terms can be more rigid, these loans still offer various options, including fixed-rate, variable-rate, or split-rate Interest-only loans can also be available. But they come with a maximum term, such as 5 years.
While the interest rates and deposit requirements are higher, the available loan options are similar to those for regular borrowers. An experienced mortgage broker can simplify the process and help you find a loan that fits your unique needs.
Home Loan & Mortgages for Foreigners in Australia
According to the Foreign Investment Review Board (FIRB), if you’re a foreigner or non-resident looking to buy property in Australia, you can secure a home loan, provided you understand the property market. The FIRB supervises foreign investments in Australia. That’s why following their application process and guidelines is important for your property purchase.
Key Features of Non-Resident Mortgages
The good news is that some Australian banks offer home loans to non-residents with similar features and competitive interest rates as those provided to local borrowers.
But there are several unique aspects you need to be aware of:
Feature | Details |
FIRB Approval | Non-residents must get approval from the Foreign Investment Review Board (FIRB) to purchase residential properties. This involves additional fees and conditions based on property type and intended use. |
Interest Rates | Non-resident borrowers generally face higher interest rates than local residents due to risk premiums applied by lenders. |
Loan-to-Value Ratio (LVR) | Foreigners typically have a lower LVR, meaning they can borrow less. For example, a 70% LVR means a 30% deposit is required. The lower the LVR, the higher the deposit needed. |
Visa Type | Some lenders approve loans only for non-residents holding specific visas, such as 457 or Subclass 482. |
Limited Lender Options | Only a few Australian banks and lenders offer loans to foreign nationals. |
Currency and Income Discounting | Foreign borrowers often face a discount on income assessments, typically ranging from 20-40%, to account for exchange rate risks. |
Minimum Loan Size | The minimum loan amount for non-residents is generally $100,000. |
Maximum Loan Size | The maximum loan size varies depending on the location of the property. |
Loan Term | The maximum loan term for non-residents is usually 30 years. |
Requirements For a Non-Resident Home Loan
Non-residents can indeed own property in Australia, but they must follow certain regulations set by the Australian government.
The first step in the process is to seek approval from the Foreign Investment Review Board (FIRB), a government body that oversees foreign investments in the country. If you’re a foreign national planning to purchase property in Australia, you need to check your eligibility through the FIRB website before proceeding.
Once you’ve identified a specific property and your offer is moving forward, you must seek approval from the FIRB for that particular property.
The FIRB assesses whether the purchase will benefit Australia’s economic growth, particularly in the area where the property is located. While there are fees associated with this process. FIRB approval is usually granted, especially when the purchase aligns with the country’s long-term economic interests.
In addition to FIRB approval, there are other requirements for non-residents applying for a home loan in Australia. First and foremost, you need to secure permission from the FIRB before you can apply for a home loan. This process typically takes around 1-2 months, though fees can vary depending on the type of property or land you’re purchasing.
Certain individuals do not need to seek FIRB approval. These include:
- Australian citizens (including Australian expats living abroad)
- Holders of an Australian permanent visa
- New Zealand citizens
- Foreign nationals purchasing property jointly with a spouse who is an Australian citizen, New Zealand citizen, or permanent visa holder
FIRB rules restrict non-residents to purchasing certain types of properties, such as:
Criteria | New Dwellings | Vacant Land |
Definition | Properties that have never been sold as a dwelling or occupied. | Land that is vacant and has no existing dwelling on it. |
Ownership Duration | Must not have been lived in for more than 12 months. | No specific time restriction for ownership before construction. |
Example | Investment properties sold by developers, which have not been occupied for over 12 months. | Land bought with the intention to construct a property. |
Construction Requirement | No construction requirement before or after purchase. | Must construct a property within four years of FIRB approval. |
Application Process of a Non-Resident Home Loan
Applying for a non-resident home loan follows a similar process to applying for a regular home loan in Australia. There are a few important steps and requirements specific to non-residents.
One key step in the process is obtaining Foreign Investment Review Board (FIRB) approval.
After that, you can proceed with applying for a non-resident home loan. You can either approach lenders directly or work with a mortgage broker who specializes in non-resident home loans. Mortgage brokers can help guide you through the process, ensuring you find a lender that suits your needs and increasing your chances of a successful application.
The application itself will require several important documents to verify your identity, financial standing, and the property you wish to purchase. Typically, lenders will ask for the following documentation:
- Proof of Identification – This usually includes a valid passport and visa (if applicable).
- Proof of Income – This could be in the form of recent pay slips or bank statements.
- Proof of Deposit Funds – Evidence of where your deposit funds are coming from, such as bank statements showing savings or investments.
- Details of Existing Debts – Lenders will also want to know about any outstanding loans, credit cards, or other financial obligations.
- Credit History – A credit report will be required to assess your financial reliability.
- Property Details – Information on the property you’re interested in purchasing, including its location, price, and other relevant details.
One unique consideration for non-residents is if you’re planning to purchase a property for redevelopment. FIRB approval may be granted if the original property is redeveloped into two or more dwellings. This means that simply purchasing an existing property for personal use may not meet FIRB’s conditions if you plan to redevelop it into a single new home.
It’s important to follow all FIRB regulations, as failure to do so can result in significant penalties, including hefty fines or even criminal charges. Therefore, it’s important to ensure you have the necessary permissions and meet all legal requirements before proceeding with your loan application.
Can A Non-Resident Buy Property in Australia?
Yes, non-residents can buy property in Australia.
But the process can be more challenging compared to Australian citizens or permanent residents. If you are self-employed, the difficulty level increases, as your income will need to be verified by your lender or mortgage broker. For foreign business owners, this can sometimes be tricky because certain lenders may not accept income that comes from outside Australia or cannot be verified easily.
If over 25% of your income is derived from your business, you are likely to be classified as self-employed, which can further complicate your home loan application.
Can You Get a Home Loan in Australia as An Australian Living Overseas?
Yes, as an Australian citizen living abroad, you can still apply for a home loan in Australia.
But the approval process will likely involve additional requirements compared to those living within the country. Australian expats typically need to meet more stringent conditions to qualify for a mortgage, which can include proof of overseas income, living expenses, and credit history.
If you are applying for a joint loan with a foreign spouse, some lenders may not accept your spouse’s income. In such cases, you need to purchase the property in your name alone.
Moreover, even if a joint loan is approved, you will be subject to the Foreign Buyers Duty, which can significantly increase your costs, as it often doubles the regular Stamp Duty fees.
It’s important to consider these factors and plan ahead before making any property purchase decisions in Australia.
Are you struggling to get a home loan in Australia?
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