As an Australian expat living in Singapore, you may be considering taking out a home loan to purchase property. Securing home financing as an expat can be challenging, with mortgage providers having strict criteria regarding income sources and employment status.
If you are an Aussie expat in Singapore who wants to buy property in Australia, this FAQ section will answer the top questions about Australian home loans for Australian expats in Singapore.
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FAQs about Australian Home Loans for Aussie Expats in Singapore
Yes, most Australian lenders will provide home loans to Australian expats in Singapore as long as they can verify income and meet eligibility criteria.
The main types of Australian home loans available to expats in Singapore are:
- Variable Rate Loans: Interest rate fluctuates with the market, flexible repayments.
- Fixed Rate Loans: Interest rate stays the same for a set period, predictable repayments.
- Split Rate Loans: Part variable, part fixed interest rates. Provides flexibility.
- Interest-Only Loans: Only pay the interest for a set period, lower initial repayments.
- Principal + Interest Loans: Repay interest plus part of the principal each month.
- Low-Doc Loans: Require less documentation for self-employed/contractors.
- Construction Loans: Finance building a new home. Drawdown in stages.
- Line of Credit Loans: Revolve credit up to an approved limit, interest-only repayments.
- Introductory Rate Loans: Discounted rate for first 1-5 years then reverts.
Pros of getting an Australian home loan as an expat in Singapore include:
- Using Singapore’s lower tax rates to strengthen borrowing capacity and serviceability.
- Accessing standard Australian mortgage rates rather than higher foreign borrower rates.
- Some lenders accepting 100% of an expat’s income for serviceability assessments.
Cons or challenges to be aware of are:
- Some lenders only using 80% of a foreign income for serviceability, impacting amount you can borrow.
- Potential delays in the application process due to extra paperwork to verify foreign income.
- Tighter lending restrictions frequently placed on self-employed expat borrowers.
So, while Australian home loans are a viable option for expats in Singapore, you need to shop around lenders and be prepared to provide lots of documentation to prove your financial situation.
While most Australian lenders will accept a minimum 5% deposit from expats in Singapore, a 20% or higher deposit is recommended to avoid having to pay lender’s mortgage insurance fees; additional funds will also be required to cover other upfront property purchase costs.
Some key documents Australian expats in Singapore need to prepare when applying for a home loan include income verification, identification, living expense details, property purchase details, if they have found one, and potentially a Power of Attorney authorisation.
When assessing an Australian expat’s loan application and borrowing capacity, lenders will consider all of the applicant’s main living expenses including bills, any existing debts or loans, and any school fees they are paying for dependents.
There are differences between lenders in how they assess expat incomes – many lenders will consider 100% of an Australian expat’s Singapore salary when calculating their borrowing capacity, however some more conservative lenders will only factor in 80% of the foreign income.
Yes, there can be some lending restrictions placed on Australian expats seeking home loans, particularly those who are self-employed. Some common restrictions include:
- Loan size: Lenders may impose caps on the maximum loan amount for expat borrowers. This is often lower than what resident borrowers can access.
- Loan features: Things like fixed rates, offset accounts and redraw facilities may not be available or limited for expats.
- Income calculation: Self-employed expats may have only 80% of their income included by lenders. Multi-year proof of consistency required.
- Deposit: A 20% minimum deposit is typical for expats compared to 5% for residents. Helps mitigate risk.
- Documentation: Extensive paperwork needed to verify foreign income and assets. More rigorous than residents.
- Property type: Some lenders may limit expats to buying only established properties or cap number of dwellings.
- Refinancing: Once you have an expat loan, refinancing with other lenders can be more difficult.
So, while loans are certainly available, lenders are generally more prudent with expat borrowers.
No, Australian banks in Singapore no longer provide overseas property loans.
While Australian banks in Singapore no longer offer home loans, specialist lenders with experience and expertise assisting expat borrowers can be very helpful for navigating foreign income verification requirements when applying for an Australian home loan from overseas.
As an Australian expat with a home loan in Singapore, you have flexible repayment options including making repayments monthly, weekly or fortnightly to suit your pay cycle. Additionally, you are able to make extra repayments on your mortgage without being penalised by the lender.
The Double Taxation Agreement between Australia and Singapore prevents the double taxation of income for residents by providing tax credits and exemptions, so your income is only taxed in one country.
Australian expats do not need FIRB approval to purchase property in Australia, however Singaporean investors would require FIRB approval and have property purchase restrictions applied under Australian laws.
Australian citizens and permanent residents do not incur any stamp duty surcharges when purchasing property jointly with their spouse, regardless of their spouse’s citizenship or residency status.
However, Australian expats may incur stamp duty surcharges in some states if they jointly purchase property with their foreign spouse who is not an Australian citizen or permanent resident. For example, in New South Wales there is currently an 8% stamp duty surcharge that applies to foreign buyers. This would include an Australian expat purchasing jointly with their Singaporean spouse in NSW.
Other states like Victoria and Queensland also have stamp duty surcharges that apply when a foreign buyer purchases property jointly with their foreign spouse. The surcharge rates vary across the different states.
So while Australian expats purchasing with an Australian spouse would pay normal stamp duty rates, if their spouse is foreign (like from Singapore) they may pay additional stamp duty surcharges in some Australian states when making a joint property purchase. The surcharges only apply because their spouse is a foreigner, not because the Australian expat themselves is considered a foreign buyer.
If you have dual Australian-Singaporean citizenship, some lenders may classify you as a foreign borrower rather than a resident borrower, which can negatively impact your access to certain home loans and lead to stricter borrowing conditions.
As an Australian expat borrower, some lenders will require you to arrange a Power of Attorney (POA) for any legal actions or processes relating to the home loan that need to take place in Australia, so it’s important to check the specific POA requirements of your lender.
Singaporeans are eligible to apply for Australian home loans, however they may be charged higher interest rates by some lenders compared to local Australian borrowers.
Australian expats should expect to be offered similar home loan interest rates as resident Aussie borrowers, however they may have to pay some additional fees related to processing a foreign applicant.
Over 20,000 Australian citizens currently reside in Singapore – a significant expat population.