Borrowing from overseas - what's the best way to do it?

Discussion in 'Property Finance' started by luce.rocks, 19th Oct, 2018.

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  1. luce.rocks

    luce.rocks Active Member

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    Hi folks! Long time, no post. Hope everyone is well! :)

    A question about borrowing in Australia to buy in Australia, while we're outside Australia.

    Hubby and I started a company in January and soon I'll be getting a salary from the company. In the next year or two if things go well and the company has good income we should have a some euros to put towards buying a rental place in Sydney (hopefully this will coincide with the bottom of the market).

    Questions:
    - Is it possible?
    - Should we borrow as people or through the company?
    - What sort of LVR would we be looking at?
    - What sort of rates would we be looking at?
    - Is there anything else we should consider at this point, as far as structuring things to make it easier to borrow in the future?

    Thanks a bunch!

    Cheers, Luce

    PS. Did you know that .rocks is a domain?? So I bought luce.rocks - how funny is that! Lol
     
  2. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Hi Luce,

    Quick answers:
    - Yes it's possible, but very, very restricted.
    - Buying through a company doesn't give you any advantages.
    - There are some exceptions, but 70% - 80% LVR.
    - Same rates as everyone else.
    - Best that you have a PAYG job. Foreign income and self employed is extremely difficult and you'd need at least 2 years of track record.

    Long answer is that by the time lenders adjust your income to take into account currency fluctuations, then apply Australian tax rates, they only use a fraction of your actual income. I've seen people on $500k USD tax free overseas only able to borrow a minimal amount.
     
  3. luce.rocks

    luce.rocks Active Member

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    Well that's depressing. Our first plan was to just keep building the company then one day in 6-8 years, sell it, move back, and buy a house in cash. But now that the Sydney property market has turned I was hoping we could find a way to buy earlier, to take advantage of the cycle trough in 2-3 years.

    Hypothetical situation: 50% deposit and EUR200K salary - any chance?
     
  4. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    Foreign company or Australian?
     
  5. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Certainly possible, but the question is how much do you need to borrow? There's also the other questions around assets and liabilities, plus what evidence of the income you have.

    Lenders are significantly more conservative today than they were a few years ago. Even more so for anything to do with foreign currency.
     
  6. luce.rocks

    luce.rocks Active Member

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    Foreign.

    E.g, put down AUD800k, borrow same amount. Company and personal tax returns from Spain for 2-3 years. All hypothetical for the moment, but business is growing pretty quick, so hopefully we'll be in this sort of position in a few years.
     
  7. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    foreign self employer is more difficult than foreign employed which is more difference than resident self employed which is more difficult than resident employed
     
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  8. luce.rocks

    luce.rocks Active Member

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    Thanks Terry. Do banks consider you to be self employed if you draw a salary from a company that you are an owner of?
    *ETA - a company with other employees too, not just a one-woman show.
    Another edit - where on that spectrum does foreign rental income fall?
     
    Last edited: 19th Oct, 2018
  9. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    yes, thats self employed, but not sure how they would know this.
    foreign rents will be assessed similar to Australia
     
  10. luce.rocks

    luce.rocks Active Member

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    Thanks for that Terry, I had no idea!
     
  11. luce.rocks

    luce.rocks Active Member

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    Interesting. So totally hypothetical, but if I had 200k in rental income would that be more attractive to a bank than a 200k self-employed salary?
     
  12. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    If no debt associated with it probably
     
  13. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Given that 98 % ( estimated) of lenders wont lend to self employeds, id say a foreign rental income if properly evidenced will be worth a lot more with the few lenders that lend to expats period

    ta

    rolf
     
  14. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    4 lenders will touch self employed non residents but all of them have a restriction which is most likely going to be a show stopper.

    St George will only do this as an exception and your overall application needs to be very strong, low overall LVR, limited unsecured liabilities, dual income if possible, etc.

    Betterchoice has come out with a non resident product which is ok. There are some restrictions such as the property must be located in either Sydney, Melb or Brisbane (so no Perth, Adelaide, etc), you need 2 years financials and 6 months bank statement, max LVR is 70% however the real kicker is the loan term being max 3 years.

    Citibank's self employed policy is fantastic in that they just require the last 12 months business bank statement to validate the income. The big issue with Citibank is you must be a Citigold customer, applications be have just rental income for servicing and the borrower must be an individual so no companies.

    HSBC (I haven't done a non resident loan with them) but their policy is similar to Citibank in that you need to be a HSBC global customer.
     
  15. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Looks like Shahin is the specialist here, and its not his first expat loan.

    He'd be a great service and solutions provider im sure

    ta
    rolf
     
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  16. luce.rocks

    luce.rocks Active Member

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    Thanks a bunch guys. I've been keen to buy some local IPs over here for a while, but hubby has always been reluctant. This might be the push he needs.

    And extra thanks Shahin for such great, detailed information! :)
     
  17. sumterrence

    sumterrence Well-Known Member

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    If you're overseas and the company is in overseas you probably best try HSBC.

    Be their premier customer first and connect with one of the Australia based RM to discuss your home loan needs.

    I used to be an RM in HSBC so I know they can and will consider.
     
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  18. luce.rocks

    luce.rocks Active Member

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    Thanks Sumterrance, we're a few years away yet, but I'll remember :)