Expat Mortgages???

Discussion in 'Loans & Mortgage Brokers' started by Beau22, 9th Apr, 2019.

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  1. Beau22

    Beau22 New Member

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    Hi, I am an Australian Expat living and working Overseas and wanted to check if any Lenders would let me borrow to invest, and what the general rules/conditions are?
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Some potentially would, but the difficulty would be the ID checks,
     
  3. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    There are plenty of lenders lend to ex-pats, but lending is a bit more restrictive than if you are living in Australia. For example:

    * Most lenders will only lend 70% - 80% of the property value. Very few are willing to lend more.
    * In most cases you need to be in regular employment, not self employed. You income is generally demonstrated through payslips and bank statements.
    * If you're paid in a foreign currency, most lenders only take 80% of that income. The other 20% is lost to the potential of currency fluctuations (there is one lender that till take 90% of some currencies).
    * Some currencies aren't favoured at all. USD, UK Pound, Euro and many others are fine. I can't think of a lender that would except the Zimbabwe dollar though.
    * Regardless of how you are (or aren't) taxed, Australian tax rates will be applied to your income.
    * Negative gearing won't be applied to lenders calculators.
    * ID checks are usually done via an Australian consulate.

    Lending to non residents became very restricted a few years ago (about 2015 I think). These days some lenders are open to it and some lenders will tell you it's fine and look for reasons to say no. Make sure you have an exit strategy such as a finance clause in place. Odd are you'll do your own budget and determine what you can reasonably afford, but lenders are going to be a lot more conservative.
     
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  4. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    And it depends where you are etc.

    HSBC in HK for example allow an Australian property mortgage serviced by HK income with a high LVR (80%). Easily arranged in HK. The HK office allowed offset v's a pos geared IP but not against HK income
     
  5. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    Expat lending policy differs greatly amongst lenders so really depends on a number of things.

    CBA has max LVR's (up to 95% for owner occ purchases) for expats however their weakness is their currency list is a bit limited (common one is UAE currency).

    ANZ have a fantastic overall expat policy including currency list however all loans must be P&I and applicant must be living and working in the country so you can't be living here and earning overseas income (not related to your scenario but worth mentioning).

    Other lenders out there that have similar policies but we do most of our expat lending via the above 2 mentioned lenders.

    So the main questions are:

    1. What currency are you earning?
    2. Is the purchase investment or owner occupied?
    3. What LVR do you want to do the purchase?
    4. Does your income consist of only base or do you have commission and bonus income?
     
  6. Richard Taylor

    Richard Taylor Well-Known Member

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    As has been mentioned fairly and to 95% lvr not difficult subject to a couple of things.

    PAYG is easier but Self employed still doable.

    Cheers
     
  7. Dean Collins

    Dean Collins Well-Known Member

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    We have loans with Westpac and St George.
    (We live in the USA)

    They have restrictions around LVR of <70% but apart from that was very easy to obtain.

    This said....as an expat you will be subject to LTCG of 38-45% which is ridiculous. As such we have refused to invest in additional rental properties in Australia and our investment funds now go to USA where the LTCG tax rate is only 15%.

    Until Australian politicians change the rules for expats it just doesn't make sense for ANY expat to be purchasing property in Australia.
     
  8. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    What is LTCG Dean?
     
  9. waz

    waz Member

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    I'm in the US and doing the same research currently. Per Shahin's post above, the mortgage broker I've been working with is suggesting CBA and ANZ for the above reasons.

    @Dean Collins - do you mean Capital Gains? If so, are you holding the view point that you may never be an Australian tax resident again / have a view to sell in the medium term? I'm curious, as if the intent is to hold for the very long term and the investor intends to eventually return to Australia does this matter as much.
     
  10. Dean Collins

    Dean Collins Well-Known Member

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    Sorry acronym
    Long Term Capital Gain
     
  11. Dean Collins

    Dean Collins Well-Known Member

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    You are aware that if you DO return and sell after you come back and are a resident .....the ATO still expect you to pro-rata for your time away at the higher tax rate right?

    This said....in our instance we've been screwed without advance notice by 2 governments
    1/ When the Aust changed the rules overnight and removed 50% deduction for expats
    and
    2/ When the USA govt introduced the Heart Taxation Act for greencard holders (long story short but when we leave the USA to return back to Australia we have to pay capital gains tax on ALL assets regardless of if we've sold them or not....btw here is the kicker....the ATO refuses to recognise that you paid the IRS capital gains tax so wont offset the payment (they see Heart as not capital gains)......so long story short-yes we HAVE to sell all of our assets in Australia and liquidate to cash 'before' we leave the USA and then pay the IRS/ATO and then move otherwise we get screwed.

    This said.....yes expats get screwed by the ATO on LTCG and as such.....no expat should ever purchase property in Australia.
     
  12. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    Just a quick update on expat loans - Qudos (Qantas Credit Union) have just updated their policy in that they now accept loans up to 80% LVR and more importantly they do not shade any of the converted income.

    Betterchoice also has a funder doing expat loans at 80% - rates are not too bad circa 3.79% for P&I investment and 3.94% for IO investment. Their servicing calculator is very good and their overall policy (flexibility, cash out, etc) is quite good.

    I think lenders are starting to recognise that expat clients are one of the best and stable type of clients and are starting to change their lending policies accordingly which is great.
     
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  13. euro73

    euro73 Well-Known Member Business Member

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    Now we just need Qudos to bring back their pre APRA servicing calc. 100% of rent, actuals + Neg gearing.
     
  14. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Santa comes tomorrow...
     
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  15. Traveller99

    Traveller99 Well-Known Member

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    I’ve done it three times. It has increasingly become difficult with the last one (this year) being a long, drawn out affair that took months. The Big 4 are your best bet and I have always used a broker to manage it. Not all banks will apply Australian tax rates to your foreign income as it is dependent on the bank and on the country.
     
  16. lauz358

    lauz358 Member

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    Hi Shahin,

    Sorry to dig up an old thread, but I wanted to clarify. Are expat loans (specially, earning £ on a base salary) to purchase an IP possible at 90% LVR? I was spoilt with taking out medico-specialist loans while I was living in Australia & reluctant to have to do 80% LVR now I'm overseas!

    Edit: Never mind, I found my answer in another thread. Looks possible with CBA so I'll keep that in mind as a part of my forward planning.
     
    Last edited: 24th Jan, 2020
  17. Richard Taylor

    Richard Taylor Well-Known Member

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    Hi Lauz

    Yes 90% LvrExpat loan still doable.

    Cheers


    Richard
     
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  18. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    Hi Lauz,

    CBA will go up to 95% including LMI capped for expats but they shade the converted income at 80%.

    Betterchoice will do 90% plus LMI capped and they shade the converted income at 90%. Max loan amount is $750,000 though.

    Both lenders allow for the use of overseas rental income if you have that. Several people on the forum have large US portfolios with new debt and it greatly assists with serviceability.
     
  19. Joeisagun

    Joeisagun Well-Known Member

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    Hi Shahin,

    I live in the US.

    Few questions:
    - do parental guarantees work for expat mortgages for them to guarantee the deposit?
    - are there any lenders doing over 80% LVR now for expats? CBA said max 80% to me.
    - I am a chartered accountant, can I get the LMI exemption as an expat?
    - I changed jobs for a promotion and pay rise, same industry (finance) - how quickly will banks be happy to lend to me?

    thanks
    Joe