Expat Home Loan Overview
This page is for Australian expats trying to purchase a property in Australia to return home to, expand their investment property portfolio or refinance and obtain expat finance in Australia.
We achieve this, by taking the time to understand their financial goals, for both the short and medium-term. We then advise on the appropriate credit structure taking into consideration their overseas circumstances of being an Australian expat.
Purchasing an investment property, whilst living overseas can be a great strategy, to ‘force’ yourself to save for the future. This future can be your dream owner-occupier property or additional investment property.
Many Australian expats are generating large incomes, using existing foreign income and this strategy can ensure that once they have returned to Australia, they have a property with significant equity available, whilst taking advantage of potential foreign currency gains and Australian property capital growth.
Purchase an investment property whilst living overseas
Depending on your circumstances, you may be in a position to purchase your first investment property or add to your existing investment property portfolio in Australia.
As part of the process, hfinance can arrange a bank valuation on behalf of the client to review and see what equity is available that could be used towards the purchase of a future investment property.
Australian expats can use a mix of cash and equity, to put towards the purchase price and closing costs of the new investment property.
Purchasing your future home
Australian expats may be looking to purchase their future home to move back into the future when they are ready to return home. Purchasing a property can initially be structured to be rented out for investment purposes (as an investment home loan)
Once the expats have returned home and occupy the property, the loan can be reallocated to an owner-occupied home loan (which are at lower rates) you can read more here.
Frequently Asked Questions
You can borrow up to 90%
Subject to Lenders Mortgage Insurance and a full Credit Assessment – Australian expats can borrow up to 90% Loan to Value (LVR) for a purchase or refinance of an Australian mortgage. 90% LVR lending will only be available to applicants who are PAYG earners or employees.
Using foreign income for your Australian expat home loan
Due to the conservative nature of Australian lending. Foreign income will be shaded, when we applied towards your borrowing capacity. Some banks will apply as little as 60% of net converted income and some as high as 100% of your net income (after FX conversion to AUD)
Any potential negative gearing benefits will be ignored (as it is assumed you are a non-Australian tax resident).
Please also note that Australian Expats based in UK or overseas under a contractual arrangement can be treated as a PAYG employee for foreign income lending purposes.
Self-employed income for your expat home loan
You can still use self-employed foreign income when applying for Australian expat finance. Full financials and an accountants letter will be required to present to the bank, particularly if the tax jurisdiction is significantly different to the Australian tax system.
Read more about acceptable incomes and lending requirements. This type of income is considered a riskier lend, higher fees and interest rates might apply.
Foreign business income for your expat home loan
Two years of financial reports, tax returns, and accountants letter will be required. Foreign income from the overseas business will be converted to AUD and lenders will take 70% of the foreign income for servicing purposes.
A suitable purpose for expat home loans
Similar to Australians domiciled back home. Australian expat home loans can purchase, refinance existing mortgages, access equity, or construct a new house and land property.
Spouse citizen status
You may have found the love of your life overseas and they’re not an Australian citizen. Depending on the lender and the structure of the property ownership, the spouse’s income can be used for lending purposes.
Lenders will have specific policies on how this will be treated, some lenders will recognise the spouse income – whilst others will treat this as a non-resident loan.
To read more about acceptable income click here.
Working with a mortgage broker, we can negotiate on your behalf a discounted home loan rate with some banks in Australia. Some of those bigger banks will not allow for discounting or only pass a small discount for Australian expat home loans.
This is not the case for all products available to Australian expats, so please discuss your options with a hfinance mortgage broker.
To understand the costs involved with the purchase or refinance of an Australian investment property click here.
The most common currencies accepted for servicing of an Australian expat home loan, include: United States Dollar (USD), Great Britain Pounds Sterling (GBP), Euro, Singapore Dollar (SGD), Canadian Dollar (CAD), Hong Kong Dollar (HKD), Japanese Yen (JPY), Swiss Franc (CHF), New Zealand Dollar (NZD), Chinese Renminbi (CNY) .
These currencies are considered the tier one or gold currencies for the banks and lenders. These gold currencies are more stable and lenders will take a higher % of income for expat finance.
Bahrain Dinar (BHD), Bruneian Dollar (BND), Danish Krone (DKK), Fijian Dollar (FJD), Indian Rupee (INR), Indonesian Rupiah (IDR), Kuwaiti Dinar (KWD), Macau Pataca (MOP), Malaysian Ringgit (MYR), Norwegian Krone (NOK), Oman Rial (OMR), Papua New Guinean Kina (PGK), Philippine Peso (PHP), Qatari Riyal (QAR), Samoan Tala (WST), Saudi Arabian Riyal (SAR), Solomon Island Dollar (SBD), South African Rand (SAR), South Korean Won (KRW), Sri Lankan Rupee (LKR), Taiwan New Dollar (TND), Thai Baht (TBH), Tongan Pa’anga (TOP), Turkish Lira (TRY), United Arab Emirates Dirham (AED), Vanuatu Vatu (VUV), Vietnamese Dong (VND).
These currencies can be accepted and are considered tier two or silver currencies, please explore your lending options with a hfinance mortgage broker.
To read more about accepted currencies click here.
When Australian expats are considering a purchase of a new property or refinancing an existing mortgage – it is important to consider the costs involved in the transaction, to determine the overall cost, read more about costs involved with expat finance.
Read more here.
What income is accepted when applying for expat finance? Ordinary income used for expat lending is generally in-line with standard lending practices and can be accepted. Lenders will shade foreign income (depending on the currency the income is generated in) and take a portion. To read more.
Read more here.
The below is a list of currencies that can be used for servicing a new home loan application. To read more and see how your foreign currency is treated for Australian expat finance.
Read more here.
Reasons to engage in an Australian expat mortgage broker
Pre-departure review of existing home loans
Australian expats who have an existing home loan should review their loan and circumstances to ensure the loan is still suitable for their needs. This can include:
Accessing equity to finish renovations on the property, prior to renting out. To maximize rental returns.
Consolidate existing debt in Australia to pay and close credit card debt, personal loans or car loans.
Review of the existing loan to ensure the product and features are still suitable for an Australian expat.
Review of existing home loan whilst living overseas
Australians living overseas as expats (regardless of how long they have been abroad) should review their loan every two years. Included in that review, are some items to consider:
Fixed vs variable loans– A fixed loan locks in the repayments of that home loan for a 1 – 5 year period, this has less flexibility on the ability to make extra repayments, though the certainty of repayments appeals to expats living overseas for simplicity and budgeting reasons.
A variable loan, allows you to make additional repayments with flexibility – though the rate can increase or decrease at the discretion of the bank.
Australian Expat loan features
Principle and Interest (P&I) vs Interest Only (I/O) repayments – Reviewing to ensure the repayments is in line with the Australian expat and their circumstances (particularly if the expat is becoming a non-resident for Australian tax purposes – we strongly recommend you discuss this with an expat professional).
P&I repayments allow you to amortize the loan evenly over 30 years, from a cash flow perspective, this will require a greater repayment as you are paying a portion of the principal and interest on the loan.
I/O lending is generally for up to a period of 5 years and at the conclusion, the loan amortizes over 25 years. I/O lending requires less cash flow as the borrower is only paying the interest portion of the loan, though the rates for this type of lending will be higher.
Review of loan features
Discuss with your mortgage broker around the types of features available and what might apply to your circumstances. Including an offset account, splitting the loans (to have a fixed and variable loan portion), and redraw features.
These features may tie in with your needs to manage FX fluctuations on the repayment of the Australian mortgage. Depending on the features required, this may attract on-going fees from the lender. It is important to factor these fees into the comparison rate, to get an accurate comparison of costs between lenders and products.
Apply for an Australian expat home loan today!
How we can help:
- Refinancing an Australian Expat home loan
- Self Employed home loan for Australian Expats
- Australian expat Teacher home loan
- Australian expat Foreign Income home loan
We at hfinance are based in Sydney and Gold Coast, Australia.