Loan for Expat (Australian Citizen Living Abroad)

• Tailored for Australians who are living overseas but want to invest in property or other financial ventures back in Australia.
• Comes with competitive interest rates and terms specifically designed for Australians who are not currently residing in the country.
• Helps Australians access the local property market with flexible repayment options, despite being physically abroad.
• Use our stamp duty calculator to estimate the amount of stamp duty you will need to pay when purchasing a property.

Loan for Overseas Borrower (Non-Australian Resident Living in Australia)

• Designed for non-Australian citizens who do not live in Australia but want to obtain financing within Australia.
• Involves navigating Australian financial regulations and meeting lender requirements due to their non-resident status.
• Aimed at financing properties, investments, or businesses within Australia for those who are not citizens or residents.

Expat Loan – Who and What is it Suitable For?

• Australian expatriates wanting to:
  • Purchase a home for when you return to Australia.
  • Review your existing loan to find a better deal and save money.
  • Build or expand your investment portfolio; you’ll need an expat mortgage broker in Australia to help you do that.

How Much Can I Borrow?

• Borrow up to 90% of the property value if you’re an Australian citizen living overseas or in New Zealand.
• Borrow up to 80% of the property value if you’re a self-employed borrower living overseas (case by case basis).
• The country you reside in, the currency you’re earning, and your visa status may affect the amount you can borrow.

Will I Get Approved?

• 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.
• Each lender has its own list of acceptable countries and currencies.

How Can I Prove My Income?

• If your payslips or foreign tax returns are in English, these can be provided as evidence of your income. 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 their verification process. This is waived if you are a dual citizen or can provide other evidence that you are permitted to work in that country.
• If you’re self-employed, then there are only a few lenders that will accept your income. It’s much easier to assess overseas PAYG income than trying to work out the income earned by a self-employed Australian expat.
• We have a couple of options to assist you depending on:
  • Availability of an accountant.
  • Country you live in.
  • Your income currency.
• You may actually be able to borrow up to 70-80% of the property value with a couple of our lenders if you can provide all of the following:
  • 2 years personal and business tax returns.
  • 6 months business bank statements.
  • An accountant’s letter verifying your income.
• Some lenders will use Australian tax rates when assessing your income rather than the tax rate of the country that you’re living in. Australian tax rates are some of the highest in the world and this can seriously reduce your ability to borrow the amount you need, especially when you consider countries like Hong Kong or Singapore which have low tax rates or the UAE which doesn’t require you to pay tax at all. Luckily, we have some lenders on our panel that use foreign tax rates which allow you to borrow more. The servicing is based on the Net Overseas income and is not taxed again in Australia. These lenders will only use foreign tax rates when they can see tax withheld from your payslips. So, the trick to getting the lender to accept these rates is to provide as much income evidence as possible.
• It’s not uncommon for Australians abroad to earn an income in more than one currency. This is particularly true of professionals working at large multinationals with offices in many different countries around the world. If both currencies are on the preferred or secondary currency lists mentioned above, then there are banks that will consider these income sources. Bear in mind that a different foreign currency exchange rate will apply to each currency type which may affect your overall borrowing power. If only one or none of the currencies you earn in are in either of the lists, don’t worry. We may still be able to get you approved for an Australian expat home loan.

Getting a Home Loan with a Foreign Citizen

• If you’re married to or in a de facto relationship with a foreign citizen, this will affect the way that some banks see your application.
• There are three ways that they could assess your application:
  • Assess you both as Australian citizens.
  • Assess you both as foreign investors.
  • Use the nationality of the highest income earner to determine how to assess your loan.
• The problem is that if you are assessed as a foreign investor, only a small part of your income will be used and you’ll require a larger deposit. With some lenders, you will also pay a higher interest rate. You can avoid this by applying with a lender that has a favorable lending policy for someone in your situation. There are some lenders on our panel that accept bonus and commission incomes as well. Most lenders will ignore the income of your partner if they are not an Australian citizen or Australian permanent resident (PR) holder.
• However, the policy is in a grey area and we’ve helped many clients get approved by making exceptions. A lender may consider your wife or husband’s income in the following circumstances:
  • They have a valid visa for Australia.
  • They’re living in Australia.
  • They have ties to Australia such as family or close relatives.
  • You have children together.
  • You are married or have been de-facto for over two years.
  • You’re the main income earner.
• When you get a home loan with a non-Australian citizen, you are likely to pay foreign citizen stamp duty. However, you might be able to avoid it if only the expat or Australian citizen is on the title of the loan while still borrowing with a foreign citizen or non-resident. As this is a complicated structure, and very high risk, lenders only accept the borrowers who are in a spousal or de-facto relationship: One on Title, Two on Loan.

Hard Truth

• You won’t be able to borrow as much.
• Overtime income, bonuses or commissions income are shaded.
• Australian tax rates are applied.
• Foreign spouse’s income is not used in serviceability.

Some Common Non-Credit Issues That Expats Need to Consider

• Verification of identity (VOI) needs to be carried out, either online or via the embassy consulate. Documents and tax returns need to be translated if other than English. The mortgage documents need to be witnessed at the embassy or the consulate. Almost half of all lenders don’t accept a Power of Attorney (POA). Among those who do, they will accept POA if the applicant cannot sign the Loan Offer Documents. These things can easily derail your application leading to delays or the lender asking for more information.

One on Title, Two on Loan

• Non-residents living in Australia will find that getting a mortgage in Australia is more costly for them than for their Australian counterparts because they have to pay foreign stamp duty surcharge. To avoid the foreign stamp duty surcharge and to get competitive interest rates, an expat or a non-resident can jointly get a loan with an Australian citizen.
• The biggest advantage of adding your partner to your mortgage would be both of your incomes will be assessed during a home loan application which should enable you to borrow a higher amount.
• Additionally, having a spouse who is an Australian citizen or a permanent resident, means you are eligible for the First Home Owners Grant (FHOG) if you purchase the property together provided you meet all the other requirements.

Power of Attorney (POA) and the Australian Embassy

• If you’re overseas and need someone to sign documents on your behalf, a Power Of Attorney (POA) can help. However, some lenders have specific requirements for POAs, such as needing a solicitor or a family member. Some lenders don’t accept POAs at all, which can be inconvenient, especially if you need to have documents witnessed at the Australian consulate.
• Regardless, you’ll need your ID certified at an Australian embassy or consulate. If the lender doesn’t accept a POA, you’ll need to visit the embassy to sign mortgage documents. For joint property purchases, one partner can visit the embassy with the other’s passport. The embassy charges fees for these services, which vary by country and can be quite costly.

FIRB and Stamp Duty

• FIRB approval isn’t required when buying property with a non-Australian citizen spouse, but refer to FIRB guidelines for more information. Certain foreigners and visa holders may face surcharges on stamp duty and land tax, varying by state. Australians abroad are exempt from these surcharges, even during contract exchange. Always verify with your State Revenue Office, especially when buying with a non-citizen partner or if you’re a permanent Australian resident.

Capital Gain Tax Main Residence Exemption

• A taxpayer’s main residence or Principal Place of Residence (PPOR) is exempt from CGT when they sell their main residence.
• However, a new law will remove this exemption for expats, meaning they will face significant taxes on the sale. For example, selling a property bought for $200,000 in 1998 for $800,000 in 2020 would result in a $600,000 taxable gain.

Who is Affected by the Change?

• Foreign residents who want to sell their Principal Place of Residence (PPOR) after 30 June 2020 will have to pay CGT.
• Here, a foreign resident is an individual who is not a tax resident of Australia at the time the CGT event (sale of the main residence) occurs, which includes Australian citizens and permanent residents who are overseas.
• Individuals who are Australian tax residents at the time of sale of PPOR will not be implicated.
• The change is estimated to affect more than 100,000 Australians working and living overseas.
• The change is applicable for foreign residents under the following circumstances:
  • Where a life event does not occur.
  • They have been living overseas continuously for six years and above, even where a life event occurs.
  • They do not qualify for transitional relief wherein they acquired their main residence after 9 May 2017 or sold it after 30 June 2020.
• Besides foreign residents, the bill also affects people who come to Australia for temporary periods and foreign nationals who bought a home while living in Australia and want to sell before returning to their home country.

What About the Six-Year Absence Rule?

• Australian expats could still treat their dwelling as a main residence even when they had moved out and rented their property for up to six years (or indefinitely if the property was not rented out).
• So, under the six-year absence rule, the dwelling could still be treated as a main residence even if the property was being rented.
• The CGT main residence is not exempt for the period the property was used to produce income, exceeding the six years.
• However, the new bill completely negates the six-year absence rule, so the foreign resident will still need to pay CGT when selling the main residence for the whole ownership period.
• Even if the foreign resident was a taxpayer for the first few years of ownership, and had only rented out the property after moving overseas, CGT will be calculated for the whole ownership period.
• The new bill does not take into consideration the period when the foreign resident was living in the main residence as an Australian taxpayer.
• For example, Sally had brought a property in 2005 and established it as her main residence. She moved to New York due to a lucrative job offer and vacated her house in 2018. On 15 August 2020, Sally signed a contract to sell her dwelling. As Sally was still a foreign resident, she is not entitled to the main residence exemption even if the period of her being a foreign resident only began after 2018.
• However, if a foreign resident moves back to Australia and lives in the main residence within six years and becomes an Australian taxpayer, then the CGT main residence exemption will apply.

Any exceptions after the new bill passed?

• Expats might still get the CGT main residence exemption under the following circumstances:
• If the residence has been held continuously before 9 May 2017, a contract to sell the property must be signed before or on 30 June 2020.
• Even if the contract of sale is entered after 30 June 2020, if a life event occurs and the individual has been overseas for six years or less.
• If the residence has not been held continuously before 9 May 2017, the exemption will only apply if the owner was not a foreign resident continuously for six years and a life event occurs.

What is a life event?

• The individual, spouse or minor children under 18 years have a terminal medical condition.
• The individual dies, or there is a death of the spouse of minor children.
• Divorce or separation.

What happens if the foreign resident dies while overseas?

• Legal personal representative, trustee, beneficiaries of the deceased.
• Surviving joint tenants
• Special disability trust

Property purchasing costs

• Minimum of 5% deposit
• Stamp duty
• Property title transfer fee
• Registration fees
• Conveyancing fees
• Inspections including building/strata and pest
• Home loan set up fees
• Lenders Mortgage Insurance (LMI)

Property selling costs

• Agent Fees
• Marketing Costs
• Conveyancing Fees
• Capital Gains Tax (CGT)
• Presale Repairs and Renovations
• Styling/ Home Staging
• Auctioneer’s Fees
• Lender Fees
• Moving Costs