How to get a Home Loan in Australia as a Non-Resident (Foreign National)

How to get a Home Loan in Australia as a Non-Resident (Foreign National)

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Australia is known for having some of the most liveable cities in the world – like Melbourne and Sydney – and given its diverse landscapes, friendly locals and a long list of amazing ‘bucket list’ experiences, it has been one of the ‘must-go’ places for travellers. 

Australian property is often lauded by investors for its ability to maintain steady rental yield while achieving positive capital growth so it is not surprising to see overseas investment in Australian residential property rise. 

If you are interested in investing in the Australian residential property market as a non-resident, there are a few things you need to know.

Without further ado, let’s get to the nuts and bolts of getting a home loan in Australia as a non-resident.

Who are the non-residents?

An offset account is linked to a home loan and works like any transaction account that you use to deposit and withdraw money on a day to day basis. 

Non-residents can be categorised into two groups. 

  • Temporary residents (TRs)

Temporary residents are those who visit the country on a temporary visa, allowing them to stay beyond 12 months. They can apply for a home mortgage with the approval of FIRB and adherence to specific requirements. 

  • Foreigners

Overseas foreign citizens are people who do not have an Australian citizenship and are considered foreign investors. These individuals usually have to go through the Foreign Investment Review Board (FIRB) for approval before investing in Australia.

What is a non-resident home loan?

According to the Foreign Investment Review Board (FIRB), if you are a foreigner or a non-resident in Australia, you can consider buying a real estate property in the country so long as you clearly understand the property market. You must also adhere to the rules set by the review board in its application process. 

A non-resident home loan in Australia is possible for the purchase of Australian properties. There are lenders, banks, financial institutions, and credit groups, among others, who may be able to provide you with loanable funds which you can use to acquire, albeit at a much stricter mortgage approval criteria compared to citizens and permanent residents.

Foreign Investment Review Board (FIRB) approval

Legally speaking, non-residents can be property owners in Australia if they seek and gain the approval of the FIRB. The first step should therefore be checking your eligibility to purchase an Australian property through the FIRB website. 

When your purchase offer progresses, and you have a specific property in mind, the FIRB must also be sought for another approval on that particular piece of land. There are fees involved in the evaluation, but FIRB will, most likely, grant your request, especially if your purchase will be in support of more significant economic growth in that precise location. 

Getting FIRB endorsement usually takes about fourteen days. The fees can change upon the estimation of the private property or land sought to be bought. If you belong to the groups listed below, you do not required FIRB endorsement 

  • The Australian residents
  • The perpetual Australian inhabitants
  • New Zealand (NZ) residents 
  • Other exempted categories 

Investing in Australian property for non-residents

If you are a non-resident and have been considering investing in real estate, you’d be happy to know that there are non-resident home loans in Australia which are readily available for you. Nothing stops you from buying properties in the country as long as you fulfill all the necessary requirements.  

As a non-resident, there is always the concern about being assessed differently from residents of Australia. It may come in the form of higher fees or increased interest rates in your loan. As such, you must be prepared to accept these realities and consider if it is something that you can bear, weighing the costs and the benefits of investing in Australian real estate.

Most lenders have home mortgage packages that are quite attractive and include a unique hybrid offering or tailored-fit deal to non-residents considering their exceptional circumstances, needs and preferences. It would be wise to scrutinise every feature of your loan to ensure you are getting the best offer available.  

Some costs that you must be prepared for are fees on the property inspection, foreign citizen stamp duty, FIRB approval, loan establishment and legal processing. It may accumulate as you progress with your purchase, so it is always good to draw up your budget.

How to choose between lenders

Home loan options may be limited for non-residents compared to Australian residents, so the best thing to do is speak to one of our non-resident mortgage experts to find the best solution for you. Some lenders specialise in lending to foreign investors, Australian expats, and new migrants.

  • Banks

Policies on lending differ from bank to bank. The bank can outrightly decline since the nature of the circumstances of non-residents poses a high risk to their institution. Some banks do not accommodate clients outside of Australia.

Banks may choose to lend to non-residents but with certain restrictions. It can be in the loanable amount or in the documentary requirements to support your application. 

  • Non-bank lenders

You can also choose to deal with other non-bank lenders licensed to provide loans to consumers.Like banks, these institutions will evaluate your application and guide you through the entire process until settlement. 

Non-bank lenders are a common solution for non-resident foreigners as they are usually targeting this particular niche of the market so you will know your eligibility pretty quickly.

The process is also made seamless and hassle-free and they make sure the loan package is truly tailored to fit your unique needs. As a non-bank niche lender, they can give you what banks and other financial institutions cannot.

Loanable and Deposit Amount

The amount of deposit required differs depending on the non-resident category you belong to and the products of the lenders. Typically, overseas foreign citizens can expect to borrow between 60% to 80% of the purchase price of the property.

Fees on the property inspection, foreign citizen stamp duty, FIRB approval, loan establishment and legal processing fees are usually not able to be lent against and further funds will need to be sought.

Interest Rates

Thanks to the ever-evolving credit market, interest rates offered via non-resident home loans in Australia have come closer to the ones given to residents, although there is still a slight premium for foreign nationals. Non-bank lenders do however have a number of “risk fees” or “application fees” to compensate them for the additional risk they take by lending to foreign nationals.

Final words

Although the current lending environment is harsh for non-resident foreign nationals, securing non-resident home loans in Australia can still be possible if you know where to look. Speak to an Odin Mortgage non-resident expert today to see what options are available to you.

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