An hfinance client case study
Australian expats often find themselves in the same position. They’ve built a solid residential investment portfolio back home, foreign income has scaled faster than their debt, and they’re ready for the next move — commercial property. Structuring that deal from overseas isn’t straightforward. Here’s how HFinance helped one expat couple unlock capital from their residential portfolio to move into commercial investment.
The Client’s Situation
Our clients are a dual-citizen couple living and working in the Middle East. Both are employed on a PAYG basis, both earn income in a foreign currency, and both have strong packages that include base salary, allowances and bonuses. Over several years they’ve built a residential investment portfolio across Queensland and Western Australia, paid down their loans meaningfully, and watched property values rise.
Their next chapter was diversification: adding a commercial property in Australia to their portfolio for higher yield, longer lease terms, and the different tax and gearing treatment commercial assets receive — a distinction that has become sharper following the Federal Budget’s changes to residential negative gearing.
The Challenge
Three things made this more complex than a standard investment loan.
Expat income assessment. Australian lenders shade foreign income differently. Some accept 100% of net (after-tax) income; others as little as 70%. Bonus and allowance treatment varies just as much. A lender that’s generous on base salary but excludes bonuses can materially reduce borrowing capacity for the same borrower.
Cash-out limits. Many lenders will lend against Australian residential property up to 80% LVR — but restrict how much of that can be released as “cash out” for other purposes, particularly a commercial purchase. Some cap cash out at $1 million regardless of the equity available.
Bundling residential and commercial in one deal. Not every lender can, or will, do both at once. Splitting them across separate lenders often means delays, valuation issues, and servicing being reassessed against a moving target.
The client’s strongest investment property had grown to a value of around $2.83 million against a modest existing loan — an LVR near 17.7% — leaving substantial untapped equity. The question wasn’t whether equity was available. It was how to release it in a way that funded the commercial purchase efficiently.
The Strategy
Rather than pushing a single lender, we priced the deal across three expat-friendly options. Each solved a different piece of the puzzle. The right answer depended on the size of the commercial purchase, the security type, and how much cash-out flexibility the client wanted.
Option A — Higher LVR, larger cash out
An 80% LVR lender with a generous cash-out policy (up to $1 million with no restriction on use of funds) and income shaded to 80% of net. Best fit if the commercial purchase is under $1 million and the client wants funds sitting in an offset for flexibility. Limitation: this lender won’t accept commercial security itself — so a larger commercial deal needs to be split into two steps (residential refinance here, commercial with a specialist lender).
Option B — Dual residential and commercial application
A 70% LVR lender that shades income to 70% of net, with one critical advantage: they’ll process a residential refinance and a commercial purchase in the same application. Servicing is tighter (bonus income excluded), but the single-lender structure is cleaner when the commercial asset itself needs to be financed against.
Option C — Maximum servicing capacity
An 80% LVR specialist expat lender that accepts 100% of net income and includes all bonuses and allowances — pushing estimated borrowing capacity into eight figures. Rate is higher and additional risk fees apply, but this is the option to lean on when servicing (not equity) is the binding constraint.
The Numbers at a Glance
Priced against a $500,000 equity release from the residential portfolio, the three options landed in a tight repayment range despite very different structures:
| Option | Approx. rate | Est. monthly repayment | Income shading | Max LVR |
| A — Higher cash out | 6.24% | ~$3,075 | 80% of net | 80% |
| B — Dual res + commercial | 6.39% | ~$3,124 | 70% of net | 70% |
| C — Maximum capacity | 7.24% | ~$3,442 | 100% of net | 80% |
The point isn’t that one option is “best”. It’s that the right lender depends on the commercial deal, not just the residential refinance. A sub-$1 million commercial purchase points to Option A. A larger commercial asset that needs single-lender coordination points to Option B. A borrower bumping up against a servicing ceiling points to Option C.
What This Means for Expat Investors
If you’re an Australian expat with residential equity and you’re thinking about commercial property, three principles matter:
Equity is not borrowing capacity. You can have $4 million of equity on paper and still hit a servicing ceiling because of how foreign income is shaded. Assessment logic is the constraint, not asset value.
Order of operations matters. Restructuring residential debt first — with the commercial purchase in mind — usually produces a cleaner, cheaper outcome than treating them as two separate transactions with two separate lenders and two separate valuation rounds.
Lender choice is the whole game. Rate is the smallest variable. LVR caps, income shading rules, cash-out limits and willingness to bundle residential and commercial into one application drive whether the deal is even possible.
How We Approach These Deals
At hfinance we specialise in expat and complex-income scenarios. On a portfolio restructure like this one, our process typically runs:
- Ordering multiple valuations across lenders in parallel — AVMs where they’ll come in strong, full valuations where a face-to-face inspection will produce a better result.
- Modelling servicing across a shortlist of expat-friendly lenders using each one’s specific income-shading rules.
- Coordinating the residential refinance and commercial funding so timing lines up cleanly.
- Structuring cash out into offset facilities so the client has flexibility on when and how the funds are deployed.
Whether it’s your first commercial asset or your fifth, the right structure is the one that fits your income, your existing portfolio, and where you want to be in ten years — not just the sharpest advertised rate.
This article is general information only and does not constitute credit or financial advice. It does not take into account your objectives, financial situation or needs. Lender criteria, LVR limits, income shading rules and interest rates are subject to change and vary case by case. Repayment figures are illustrative and based on the assumptions stated. Jeremy Harper is a Credit Representative (CRN 463430) of Mortgage Specialists Pty Ltd, Australian Credit Licence 387025.