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Finance if working overseas

Discussion in 'Property Finance' started by JohnPropChat, 12th Oct, 2015.

  1. JohnPropChat

    JohnPropChat Well-Known Member

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    Let say that I move overseas for a couple of years to make a bit more money. During that time will I still be able to get 90% finance for IPs? Is serviceability calculated differently?
     
  2. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    There's only a couple of lenders that will consider lending more than 80% LVR to ex-pats. On top of that, there are restrictions on the currency you're paid in and they factor in an extra margin for currency fluctuations. There's a number of other factors that come into it as you're often assessed by Australian standards, despite living overseas where some of those standards might not apply (they still automatically take Medicare and other things into account, even though these are uniquely Australian).

    A modest challenge might be actually proving your income. This can usually be accommodated with payslips and bank statements confirming the salary, but if you're self employed it will get tricky.

    The good news is that with the falling AUD, currency can work well in your favour right now.
     
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  3. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    Not impossible - Peter has given a good breakdown of the challenges re; serviceability.

    Outside of policy/serviceability, it's just a matter of meeting the lenders/State governments identification requirements which may require consular officials to sign off + couriering documents back to Australia - aka not 30 day settlements unless you like taking risks.
     
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  4. Redom

    Redom Mortgage Broker Business Member

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    Its the same process to calculate serviceability - income less expenses, and you base your borrowing power of that. LVRs and policy do depend on the bank and its different. Some are much better than others.

    In terms of lenders and specific policy:

    CBA will do it to 90%, (even 95!) can't think of anyone else on the top of my head that'll go to 90% anymore with foreign income (i think it may be no-one else given the insurers!) . However, they only accept a handful of currencies and will only take 80% of your income for servicing. Can include more currencies if your an existing customer.

    The other strong player here is St George. Until recently they would've gone to 90% but they've reduced their investment LVRs so you'd fall into that. They have a much wider list of countries with acceptable income AND allow 100% of your overseas income to be used. They'll tax it and won't include negative gearing (unless exceptions are made), but thats pretty standard.

    Others like Macquarie will take 90% of the foreign currency income at an 80% LVR. Not sure if they have a set list of countries, but my experience with them is they'll take it. No negative gearing either.

    Income evidencing will likely involve:
    • Payslips in English
    • Employment letter (in English!)
    • Banking credits showing salary
    Identification/Mortgage witnessing (qld transactions):
    • Consular JP witnessing - can be painful and add delays.
    Employment:
    • Not any different that i know of. Same as lender policy.
    Bonus income is often the point of contention here - most lenders need to see it evidenced over a period of time (2 years) and some don't really like to include it at all. From my experience, most expats are signficantly rewarded in incentive structures. I know a network of young bankers in Singapore - they're usually paid larger bonuses than actual salaries.

    And yes, definitely get a 6-8 week settlement at least. 30 days will be a real test of the courier system!

    Cheers,
    Redom
     
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  5. JohnPropChat

    JohnPropChat Well-Known Member

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    Thanks for all the fantastic replies. I am contemplating spending a couple of years in the US to boost my finances. I make $100k to $105k (plus super) here and will probably make a similar amount over there but in USD. So with a 30% exchange rate difference and lower living costs I may be able to accelerate my purchasing or even play in the US real estate market. Have to research this a bit more.. Thanks again.
     
  6. jsoe000

    jsoe000 Well-Known Member

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    You might have seen my other thread: https://propertychat.com.au/community/threads/mortgage-brokers-option.4278/

    It's a pain. We are earning more than back home in Aus but banks still won't lend us anything. ANZ's verdict was: I can't show you have sufficient income to borrow additional funds.

    Not to blow our own horn, but our 5 IPs are all positively geared, decent equity to refinance, and we are earning pretty much double the take-home money now. We used to have to scrape the barrel in Aus. Now, we have more savings in our accounts, yet banks say no. I'm engaging a mortgage broker but I don't think it's gonna be easy. It all comes down to serviceability, and that is up to the banks how they calculate it.
     
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  7. Blacky

    Blacky Well-Known Member

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    As others have said not impossible but presents different challenges.
    Im with CBA and it has worked out ok for me. StGeorge were painful, and they have not only a list of currencies but also a list of countries which they accept - but they won't share this with you.

    CBA take the rate on the day at 80%. They also apply 'Australian living costs' to your serviceability - even if where you live is significantly cheaper than Australia. Tax, medicare and other costs are also included.

    You also need to make sure that you are eligible to be a non-resident for tax purposes. It is not as simple as simply leaving the country. You could be hit with 30% tax on all your overseas income.

    Where are you headed?

    Blacky
     
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  8. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Haven't gone to them in a little while but ANZ is generally good in this space - providing you have decent servicing. Last deal I did with them was two 90% IP purchases for an expat working in the Middle East.

    Cheers

    Jamie
     
  9. JohnPropChat

    JohnPropChat Well-Known Member

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    Don't have a destination yet. I am thinking US for better pay and possibility of playing in the US real estate market.

    Alternatively, I have to find a way to bump up my pay here by 20 to 30%
     
  10. Blacky

    Blacky Well-Known Member

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    Not sure what industry you are in but it has been my experience that salaries in the US are lower-same as what you get in Oz. Then you have to pay US taxes. Even with current fx rates I would be surprised if you are 20-30% better off working in the US. However, Im willing to stand corrected on this as some industries in the US do have higher salaries.

    The real money is in places outside US, UK and Euro zone. You should be able to get something one the same figure paid in USD - with the added bonus of being tax free. You could be talking 30-50% net increase. Again though depends on industry/quals.

    Blacky
     
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  11. cheekykoon

    cheekykoon Well-Known Member

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    I just had a rude shock when ANZ closed on non-residents financing for apartments <50sqm internal. Is this the trend?
     
  12. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    Non Resident lending certainly is under the microscope - and I can see this continuing as it's a hot button topic in politics/society. As always so long as it's not legislated against, there will always be a provider at a price.