Thera are generally very few limitations for Australians expat, and In most cases, you may borrow as much as a citizen residing in Australia. You may generally borrow up to 90% of the property value with stable employment, and usually 80% when self-employed. Medical professional working internationally may still generally borrow up to 95% of a purchase price with no LMI, but this varies from lender to lender.
The country you reside in, the currency you’re earning, and your visa status may impact the amount you can borrow, and this limitation varies between lenders, as do most of the attributes applied to expat borrowing. However, the process takes shape in a similar way to local borrowers, albeit with a few differences. Note that Australian taxation thresholds generally apply to expat borrowing in Australia.
Expat Considerations
An understanding of a few key points should be understood.
- Australian tax rates are used by some lenders when assessing your income which can limit your borrowing power if you live in a country with low tax rates. For example, a number of borrowers – particularly in the aviation, healthcare, and hospitality sector – are often paid in US Dollars with no or little tax paid. In other cases the same low taxation may apply but you’re paid in local currency (typical in countries such as Dubai or parts of Asia).
- Each lender has its own list of acceptable countries and currencies.
- If your partner is not a resident of Australia, their salary will usually not be considered.
- Your 10% deposit must usually be genuine savings.
- Property acquired overseas is rarely (if ever) permitted as security by major lenders. This is because they cannot register your property locally as a secured asset.
- Most lenders will require three months of bank statements to show your salary being deposited into your account.
- A valid work visa is required by several lenders as part of lender verification processes. This is usually waived if you are a dual citizen, or you can provide other evidence that you are permitted to work in that country.
- If your payslips or foreign tax returns are in English then these can be provided as evidence of your income. Larger lenders will often have foreign specialists on staff that can manage foreign documents.
- Many lenders will consider expats paid in two currencies, typical of larger companies, or when a salary-based per diem is paid for those that travel as part of their employment.
- If paying in an accepted foreign currency, lenders will generally apply a margin that is higher than the published exchange rate. Some lenders will use the daily exchange. The type of currency you earn may have a significant impact on your borrowing power.
- A surcharge on stamp duty and (possibly) a land tax applies to certain foreigners and visa holders. This requirement varies depending on your state and type of property.
Interest Rates
While there are lenders that may generally waive the LMI requirement for appropriately qualified medical professionals, discounted rates are usually not available to other groups. The published rates are usually those that will apply to your borrowing, although additional fees will apply for the purpose of currency conversions and additional administration. Generally speaking, a higher rate will not apply to expats unless there’s difficulty is verifying your income.
Tax Rates
Lenders will often evaluate your income at local tax rates, which are some of the highest in the world, while some counties apply tax incentives to attract foreign skills meaning that the rate you pay if often less than the rate paid by citizens. If you’re working in the UAE (and we often see Australian expats come to us from Emirates Airlines, Etihad, and others), you may not be paying tax at all… although many lenders will apply the tax rate that you would pay if the same salary was paid in Australia.
Some Australian lenders will consider your Net income and will not reindex your salary based on local tax thresholds.
The policies applied to various types of expat lenders is rather complicated, and differs enormously from one lender to another. Our staff deal with this type of borrowing routinely and will simplify the process, so making contact with us for a broader understating of your borrowing position is usually recommended.
Borrowing With a Foreign Citizen
First, if your co-borrower is an Australian citizen, temporary resident, or you are married with pending paperwork, borrowing with another person is usually accepted with suitable evidence. Some lenders will evaluate your borrowing based on both incomes; others on the higher income; and some lenders will evaluate you both as foreign investors. In same cases, a specific foreign product may apply, and it may carry a higher rate. Most lenders will ignore the income of your partner if they are not an Australian citizen or Australian permanent resident (you may often navigate this limitation with some specialist lenders).
One on Title, Two on Loan
When you borrow as a non-Australian citizen, you are likely to pay foreign citizen stamp duty. However, you might avoid this requirement if only the expat or Australian citizen is on the title of the loan. You should talk to us about the various lender policies that apply.
Should You Use a Power of Attorney (POA)?
If you’re living internationally as an expat it may often by prudent o have a trusted family member, friend or solicitor that can sign documents on your behalf. A Power Of Attorney (POA) allows them to do this, although digital signatures and our technology will usually mitigate this level of abstraction. however, a few lenders require you to have a POA that meets their requirements.
Vesting the Aussie Embassy
If documents must be signed in person (and not digitally), you may be required to visit a local Australian embassy to have your documents witnessed. A processing fee will be applied for certifying or witnessing these documents.
Is Australian Government approval Required?
If you are an Australian citizen, Australian Government approval via the Foreign Investment Review Board 
(FIRB) is not required. This applies even if your spouse is not an Australian citizen. Non-Australian citizens buying property in Australia will have a number of conditions applied.
Conclusion
While the process itself is made simply, there are a number of complexities introduced into the expat borrowing equation. We recommend you contact us for an initial discussion so we can introduce you to various options, and possibly discuss any limitations.
