Currently in 2011 there are approximately 450,000 international students in Australia working their way through their respective studies. Most of these are on a student visa and some are are interested in purchasing a property in Australia as a place to live while they are here studying instead of paying rent or board. Buying a property in Australia may also be part of the longer term goal of Australian permanent residency and ultimately obtaining Australian Citizenship.
This article outlines some general information on when international students in Australia on student visas can obtain a home loan and the requirements of the same.
1) Can I Get a Home Loan in Australia on a Student Visa?
Most banks, credit unions and building societies will not lend mortgage finance to International students studying in Australia as they are deemed too risky. The concern of the banks is essentially that you will leave the country without paying the mortgage. This leaves the bank with the task to sell the property to get their money back, and no lender likes doing this.
There are however a few lenders in Australia that will lend home loan finance to non residents on student visas providing strict criteria is met as below.
2) How Much Deposit Will I Need for a Student Visa Home Loan?
Non-Resident students can borrow up to 80% of the purchase price thereby requiring a 20% deposit plus costs. For example, if you were purchasing a $400,000 property you would require a 20% deposit being $80,000 plus stamp duty and legals. Stamp duty and legals is generally around 3-5% of the purchase price however it varies significantly depending on the State you are living in. In some States first home buyers do not pay stamp duty at all up to a certain level and students on student visas can often take advantage of these stamp duty discounts.
3) What Types of Student Visas will the Australian Home Loan Lenders Accept?
Most types of student visas are acceptable including;
Vocational Education and Training Sector Visa Subclass 572
Higher Education Sector Visa Subclass 573 Visa
Masters and Doctorate Sector Visa Subclass 574
Skilled Overseas Student Visa Subclasses 880, 881 and 882
4) What are the Requirements to Get Home Loan Approval?
To be approved for a home loan on a student visa the following are what the banks will require to consider your application;
1) 1 year in current employment (exceptions can be made but generally 1 year is required),
2) Clean credit history free from defaults etc (never normally an issue for temporary residents given its very difficult to obtain credit without permanent resident (‘PR’),
3) Income sufficient to afford the repayments (borrowing capacity is evident),
4) 20% deposit plus costs as advised above – gifted funds from mum and dad for example is fine even if the funds are being gifted from an overseas bank account providing we can see it in an Australian bank account prior to approval.
As a general rule, student visa holders will require Foreign Investment Review Board (‘FIRB’) approval when purchasing property in Australia. There are a few exceptions such as if you are purchasing with an Australian citizen or permanent resident but generally for most students an FIRB application will be required.
FIRB approval is a formality and nothing to be too concerned about providing you are purchasing the property to live in or are purchasing a brand new property.
More information on student visa home loans here.