When you’re not living in the country (expat) or you’re being paid in a currency other than Australian dollars, it can prove slightly more challenging to buy property in Australia.
Living abroad or being a temporary resident when purchasing property in Australia has a whole host of challenges, none of which are insurmountable. The trick is to know of them in advance to help you with your planning and to ensure that you have the right people on your team to make it happen.
Follow our guidance to make sure you secure your loan.
This tip isn’t only for expats or non-residents; it’s for anyone who intends to apply for a loan. Most lenders want to see at least three months’ worth of savings, payslips and credit card statements. However, to give yourself the best chance of securing your loan, start saving, and organising your paperwork, at least 12 months before you apply. The more evidence you have to show your lender, the faster the approval process, especially when you’re after a fully verified pre-approval so you can shop with confidence, knowing your budget.
A common question is how to physically purchase a property when living abroad. Most expats arrange a pre-approval first and then fly back home for a house-buying holiday. Sometimes they use their family and friends to find a property for them. Although family and friends will have a good idea of what you like or don’t like, they have their own lives and often don’t want to spend their free time searching for property. You need a buyer’s agent.
If you haven’t heard of buyers’ agents, they’re like real estate agents but they work for you, the buyer, to get you the best deal on a property (unlike real estate agents whose loyalty must be with their clients, the sellers).
For expats or non-residents living overseas, a buyer’s agent is your eyes and ears on the ground, keeping a lookout for property on your behalf. Once you explain to your buyer’s agent what you want, and where, they will connect with all their local and interstate contacts. They can also handle all the negotiations on your behalf, so you save time and money by not having to make a trip back home.
Buyers’ agents generally have large databases of properties for sale. This means they often get access to a property that is coming up for sale before the property is advertised to the general public as they have relationships with real estate agents who go first to a buyer’s agent for a quick sale. Often a qualified valuer, a buyer’s agent knows what a property is worth and therefore knows a good deal when they see one.
Generally, they charge between 2% and 3% of the purchase price. This might seem like a lot but often a buyer’s agent can find you great deals 10-15% below market value to which you would otherwise not have access.
While you might get away with do-it-yourself loan application if you’re trying for a standard loan, when you’re an expat or living overseas, there are many factors to consider.
A specialist mortgage broker can help you avoid common issues that will cost you more money in the long term. Dealing with foreign currency, documentation in a language other than English, regulatory requirements and taxation issues can be a complex web.
Key factors are:
In many cases, foreign citizens living in Australia or overseas as well as temporary residents will require FIRB approval before they commit to buy residential property. You will not need FIRB approval if one of the following exemptions applies:
Case study:
Maddie* is an Australian citizen married to Klaus*, a German citizen with a Permanent Residency visa. The couple were looking to buy two investment units in Sydney. Some of the challenges they were up against included:
Maddie and Klaus now have an investment portfolio of two Sydney units and the longest part of their lending process was receiving the fully verified pre-approval. I recommend everyone should obtain pre-approval upfront as it takes away most of the uncertainty about whether or not you will successfully be able to obtain a loan.
As a general rule, expats and non-residents will not pay higher interest rates when buying property, but there will be a limited number of lenders to choose from.
We will provide a quick overview of some of the major considerations for expats, but you can gain a much more comprehensive insight with MAP Home Loans’ Buying Property in Australia: The Temporary and Non-Resident Guide to Buying Australian Property. To get your copy, visit www.maphomeloans.com.au.
If you are an Australian expat and planning to buy a property for investment purposes, it is important that you submit a tax return every year to preserve and take advantage of any negative gearing benefits. It is helpful to use an accountant who is experienced in non-resident tax returns.
Need help buying property?
We’re here to help. Call us on +61 07 2143 8230 or email us using the contact form.
KarynMAP home loans were referred to me by my Financial Advisor. I was looking to purchase my forever home as I transition to retirement. It was a long shot that I would be able to purchase another home but with the help of Justin at MAP Home Loans this become a reality. I would recommend contacting Justin for your home loan needs.
Grant VolrathI was referred to MAP Home Loans through a 3rd party and can say that I was very well satisfied. Justin never missed any communication and seemed to go above and beyond to help us with our loan. Not only that but the care before and after along with guidance he got us a couple government grants too. Absolutely fantastic Job and will definitely be passing on his information to any friends and peers.
CatiaA huge thank you to Justin for his outstanding service! Finding the perfect place was no easy task and it took a while, but Justin’s support made all the difference. He was always available, providing expert advice and guidance every step of the way. He ensured that I was prepared for the application process, leading to a smooth and successful outcome. I couldn’t have asked for a better experience, and I wholeheartedly recommend Justin. Thanks for helping with this important milestone for me and my little family.
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