Non-Residents
1. Who is a Non-Resident Individual?
2. Do lenders consider non-resident loans?
3. Main considerations
4. Supporting documentation required
5. Who is the FIRB?
6. What does te FIRB do?
7. Who needs FIRB approval?
8. Who is exempt from FIRB approval?
9. Can I apply to an australian lender for a foreign currency loan?
What a non resident individual?
Any person who:
- Permanently resides out of Australia and is not an Australian citizen, or
- Is an Australian citizen that is living and working out of Australia, or
- Is not an Australian citizen, or does not hold a permanent residency visa, but resides in Australia
Do lenders consider non resident loans?
Not all lenders will offer mortgage loans to persons who are not residents of Australia or New Zealand. However, the majority of large lenders will lend to non residents.
Main considerations
- How much do they lend? - The maximum any lender in Australia will lend to a non resident is up to 80% of a property’s value. Some lenders will restrict the maximum loan to a value ratio even further to 70% or lower. This means that purchasers need to have a deposit of at least 20% of the purchase price, together with all the legal costs, including stamp and mortgage duty which will normally equate to approximately 4% of the purchase price
- Loan assessment? - Lenders in Australia usually assess applications from non residents differently from residents. Not only does borrowing capacity vary amongst the lenders, but consideration is also given to the stability of the currency of the income received – most lenders will only consider income from stable currencies and not those paid in a volatile currency
- Languages? - If the income and payslip is written in a language other than English, it must be translated and the currency is converted at the current applicable rate
- Foreign exchange? – Some lenders include a foreign exchange risk margin. This is essentially a buffer margin to take into account any movements in the exchange rate This reduces your borrowing capacity
Supporting documentation required:
- Identification - photocopies of your passport, identification cards (licence etc)
- Income - Proof of income (payslips and income tax assessment notices) – foreign currency will need to be converted to $AUD and the information translated to English if applicable
- Savings - Bank statements to confirm savings, asset strength and equity
- Proof of ownership - Copy of Contract of Sale or proof of ownership of any property to be offered as security
- Loan history - Proof of satisfactory repayments of any debts and commitments over past 6 months
- FIRB - FIRB Approval (if required)
Who is the FIRB?
The Foreign Investment Review Board
What do they do?
The Board examines proposals by foreign interests (eg, individuals, companies, etc) to undertake direct investment in Australia and makes recommendations to the Government on whether those proposals are suitable for approval under the Government's policy.
Who needs FIRB approval
- Purchasers who are not citizens or permanent residents, have to apply to the Foreign Investments Review Board (FIRB) for approval to purchase property in Australia – please refer to the following website for further information and requirements: www.firb.gov.au
- Purchasers must obtain prior approval from the FIRB to purchase real estate in Australia. Any person purchasing real estate without prior approval to do so, is liable for heavy penalties
Who is exempt from FIRB Approval?
Exemptions include:
- Acquisitions by Australian citizens resident abroad
- Acquisitions of property zoned residential by foreign nationals who hold permanent resident visas or hold, or are eligible to hold, a ‘special category visa’ (for example, a New Zealand citizen)
- Foreign persons purchasing, as joint tenants, with their Australian citizen spouse, property that is zoned residential
Can I apply to an Australian Bank for a Foreign Currency loan?
Some lenders allow borrowers, both residents and non residents, to borrow in a foreign currency. This is restricted to ‘major’ currencies.
The main criteria here is that your main source of revenue is received in the same currency e.g. if a person is working in New Zealand and earns New Zealand Dollars, then they can borrow NZ$ from an Australian Bank, at the same interest rate.
This alleviates exposure to movements in the exchange rate.
