Can Permanent Residents Living Overseas Buy Property in Australia?

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Are you a permanent resident of Australia living abroad and thinking about buying property in Australia? As an expat, navigating the home loan process might seem overwhelming. However, obtaining a mortgage as an Australian permanent resident based overseas is a possibility.

While the general process is similar to that for Australian residents, there are some differences to consider, such as stamp duty, loan type options, and lending criteria. It’s essential to be aware of these differences to avoid any complications during the mortgage application process. Joint property investment with foreign nationals can also present further complexities.

In this guide, we’ll provide professional advice to help you navigate the process of getting a home loan and approval in Australia as a permanent resident living abroad.

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Can Overseas Permanent Residents Buy Property in Australia?

If you’re looking for a home loan in Australia as a permanent resident living overseas, this page is for you. At Odin Mortgage, we understand how challenging it can be to find the best home loan when buying your property when you’re not residing in Australia.

This page provides professional guidance on the maximum borrowing limit, purchasing property with foreign income, stamp duty charges, and applying for mortgages as a permanent resident living abroad. You might not be aware of what loans you qualify for.

We can assist all Australian expats with their home loan options to get on the property ladder and what to watch out for with your mortgage application.

Overseas Australian Permanent Resident Property Purchase

A permanent resident living overseas is someone with Australian residency living abroad, either on a temporary visa or permanent resident visa, like in Hong Kong, Singapore, or the UAE.

Those whose primary residence is overseas might find it harder to obtain approval for their home loan than someone who is only a temporary resident abroad. This is usually because lenders require higher deposits and are more suspicious of currency values fluctuating.

Many banks and lenders won’t offer home loans to Australian citizens living overseas. Some require special terms for overseas Australians. However, at Odin Mortgage, we aim to find conventional mortgages for all Australian expats, whether they are temporary residents abroad or permanently living overseas on the same terms.

Legally, however, there are some stipulations for Australian expats to qualify in order to purchase a property in Australia. In recent years, particularly, the Australian regulators have tightened restrictions to limit foreign investments into residential property in Australia. Yet, it is not impossible. We are here to guide you through every step to purchase your property in Australia from anywhere in the world.

Overseas Resident Property Buying with Foreign Income

This is where many mortgage lenders will turn their backs on you as an Aussie expat applying for a home loan. Not all lenders will offer you a home loan if your main source of income is in foreign currency.

If you have permanent residency in Australia, lenders will consider 100% of your net income when considering approval for your home loan when buying a property in Australia. However, if you live in another country, most lenders will be more meticulous about your financial situation.

Most banks will discount your income by 20% if you earn an acceptable foreign currency and will apply Australian taxes to your income regardless of where you are residing, which will impact serviceability and borrowing capacity.

However, here at Odin Mortgage, we have lenders that would apply local effective tax rates to your foreign income, allowing you to maximise your borrowing.

Proving Assets and Foreign Income

You may need to seek professional advice about how to provide proof of your work history and income. The lender may require you to present backdated payslips to prove your ability to repay the mortgage.

Furthermore, if you have a permanent resident spouse who is not from Australia, it might be more challenging if you put them down as a home buyer. However, if you need their income for borrowing power, you might be able to add them as a co-borrower rather than a buyer.

It is best to speak to a mortgage broker who specialises in expat mortgages to understand how to present your professional, financial and personal information to the bank.

Maximum Lending Ratios for Permanent Resident Property Purchase

Before a lender decides to offer you a loan, they assess your ability to repay back the loan and interest rates. To work out if you qualify, lenders calculate something called the loan to value ratio (LVR). This calculation uses the value of the property and the deposit amount, or down payment, to judge your ability to repay the mortgage.

The loan to value ratio is calculated by dividing the borrowing amount by the property value. For instance, if the property value is $500,000 and you will need a loan of $350,000. The loan to value ratio is 70%.

For those with a permanent resident visa abroad, banks require a minimum deposit of 20%. Most banks have a maximum value ratio limit, sometimes as high as 90-95%. However, lenders then often require you to get Lenders Mortgage Insurance (LMI) to protect the bank should you default on a payment.

You can use this calculation to work out how big a deposit you will need to save.

The bigger the deposit you can offer, the lower the value ratio will be, and therefore, the more willing lenders will be to offer you a home loan. The lender might reward you with lower interest rates and other benefits as it is less risky for them to borrow.

On the other hand, a high-value ratio suggests to the lender that you are a risk. You also will have to borrow more money to cover the property investment, leaving you vulnerable to rising interest rates. You might also be charged with mortgage insurance, which is a one-off lump sum additional charge.

Be Careful of Foreign Investment Regulations!

If you’re a permanent resident living overseas and want to invest in property, you need to watch out for the foreign stamp duty surcharge when buying property in Australia. This surcharge is applicable to all Australian states, except the Northern Territory. The stamp duty regulations and requirements differ in each state. It is a good idea to talk to a professional about whether you are eligible to pay stamp duty.

Stamp duty typically ranges between 4-5% of the property’s value. If you purchase a resident home in Australia costing $1,000,000, you might find yourself paying between $40,000 – $50,000 in stamp duty. This hefty addition to the mortgage can be very challenging for foreign citizens, or Australian expats married to foreign citizens.

As mentioned earlier, be careful if your spouse is not an Australian citizen. Foreign home buyers are required to pay a stamp duty surcharge of 7-8% of the property’s value. Even if you purchase the property together, you could be jointly hit with the surcharge. If you are solely relying on your income, you should be okay.

However, if you need your spouse’s money to get a loan, speak to a professional about your circumstances.

Also, if you are newly residing in Australia, you may similarly be eligible to pay the stamp duty surcharge. If your permanent resident visa is new, double-check whether you meet requirements. For example, in some states, you might have to pay a surcharge if you have had your visa for less than 200 days.

At Odin Mortgage, we know how tricky it can be to work out the intricacies of stamp duty regulations. That’s why we’re here to help. 

How Do Interest Rates Differ for PR Buying Property in Australia from Overseas?

Don’t worry, Australians residing abroad are able to get the same interest rates on their FHA loans as anyone living in Australia. Over the last twenty years, market interest rates have fluctuated between 3-5% . Make sure to compare different mortgage permanent resident lenders to find the best home loans and interest rates.

Australian expats are also able to apply for interest-only, fixed-rate or variable-rate home loans. Interest-only loans offer the opportunity to only pay the interest at a fixed rate for an introductory period of time. After this period, usually no more than five years, the borrower then must repay the principal amount back with each monthly payment.

Fixed-rate home loans are a type of personal loan that offers a fixed interest rate for the first few years of the loan. Similarly, this introductory period can be up to five years maximum. The benefit of a fixed-term loan is that you repay a stable, regular amount each month. If you’re nervous about budgeting for your mortgage repayments, this might be a good option.

However, the downside of fixed-term loans is that you might end up paying higher interest rates if the interest goes down. Although, you will similarly pay lower interest rates if the rate goes up.

A variable-rate mortgage is when you pay whatever interest the market interest rate is. This can fluctuate from month to month, sometimes higher than the starting rate, sometimes lower. Both fixed-rate loans and interest-only automatically become varying interest loans after the introductory period is up.

Applying for a PR Mortgage in Australia

The process of applying for a mortgage is much the same if you reside in Australia as it is if you are a temporary resident overseas.

The good news is that you don’t need Foreign Investment Review Board (FIRB) approval to buy a house in Australia as an expat.

Typically, the bank will look at your valid identification, personal information, financial details, visa, credit history and credit score. As you are living abroad, lenders might conduct a more thorough search into your credit report before offering you a home loan.

Mortgage brokers and lenders might also request more information. There are many countries in the world, and not every bank in Australia can be an expert in how each of them operate. Therefore, the process to get your home loan approval might be more time consuming as an expat than for those living in Australia.

Lenders will then look at your LVR to decide whether to offer you a home loan. You will also need to present your passport, proof of address, credit history, payslips and visa to get loan approval.

Secure a Home Loan for PR Holders

For all permanent visa holders in Australia and expats living abroad with a visa, Odin Mortgage is here to help you qualify for your mortgage.

We offer all the resources you need to get your home loan approval:

Whether you have found your ideal property or not, it is best to speak to lenders as soon as possible. Knowing how much money you can offer when looking to buy will be a great advantage on the property market. It will prove your reliability and seriousness about buying a home in Australia.

In addition, you will be better prepared to find the property you want within your budget, saving you time, stress and money.

Contact us today to received personalised home loan solutions for your needs.

Get a free Australian mortgage assessment today.

Apply online to get a free recommendation with real rates and repayments.

Frequently Asked Questions

Yes! As a permanent resident, you have the same rights as Australian citizens when it comes to buying property. You can apply for a mortgage without any special permission. Even if you’re an expat living abroad, as long as you’re a permanent resident, you can still buy property in Australia.

While permanent residents have unrestricted rights to buy property, temporary residents might have to obtain FIRB approval. This regulation exists to prevent foreign investment from disrupting the Australian property market. So, if you’re a temporary resident, make sure to seek advice before buying a home in Australia.

Purchasing property in Australia involves several additional expenses on top of the mortgage itself. These expenses include legal fees, loan establishment fees, stamp duty, FIRB approval fees (for foreigners and temporary residents only), property inspection fees, and buyer agent fees. It’s always a good idea to budget an extra 5% of the house value to cover these expenses.

As an Australian permanent resident living overseas, you can usually borrow as much as Australians living in Australia. However, expats typically need to provide a deposit of at least 20%, which means you can borrow up to 80% of the property’s value. However, it’s important to note that the country you reside in and its currency may affect the amount you can borrow.

The overseas resident property buying process in Australia involves several steps and requirements. Here’s a simplified overview:

  • Research and Planning: This includes understanding regulations and determining your budget, including additional costs such as FIRB application fees, legal fees, stamp duty, and other charges.
  • Foreign Investment Review Board (FIRB) Approval: Most foreign nationals need FIRB approval to buy property in Australia. Apply online and pay the applicable fee. Approval is typically required before purchasing.
  • Finance and Mortgage Pre-Approval: Explore mortgage options available to non-residents. Different lenders have varying criteria and interest rates for overseas buyers. Obtain pre-approval for a mortgage to know how much you can borrow. Provide proof of income, credit history, and other financial documents.
  • Property Search: Hire a local real estate agent who understands the market and regulations for foreign buyers. Conduct inspections (physically or virtually) to find suitable properties. Consider location, price, and potential for capital growth or rental yield.
  • Making an Offer and Signing the Contract: Submit an offer through your agent. If accepted, proceed to sign a contract of sale. Have a solicitor or conveyancer review the contract to ensure all terms and conditions are clear and in your best interest.
  • Settlement and Completion: Pay the deposit as stipulated in the contract (usually 20% of the purchase price). Once FIRB approval is obtained and the mortgage is finalised, the settlement process begins.
  • Post-Purchase: Pay any applicable stamp duty. If you plan to rent out the property, consider hiring a property manager. Ensure ongoing compliance with FIRB conditions and other legal requirements.
  • Additional Considerations: Understand the tax implications of owning property in Australia, including income tax on rental income and capital gains tax on property sales. Also, be mindful of exchange rate fluctuations if your funds are in a foreign currency.

Consulting with professionals such as real estate agents, mortgage brokers, solicitors, and tax advisors who specialise in working with foreign buyers can help navigate this process smoothly.

Here are the key property purchase rules for PR holders outside of Australia:

  • Eligibility: As Australian PR holders, you have similar property purchase rights as Australian citizens. You can buy both established dwellings and new properties without needing Foreign Investment Review Board (FIRB) approval.
  • Financing and Mortgage: PR holders can access the same mortgage products as Australian citizens. However, living overseas may influence the lender’s assessment of your application.
  • Income Verification: Lenders will require proof of income, typically through payslips, tax returns, and employment contracts. The income should preferably be in a strong currency.
  • Deposit: A deposit of at least 20% is generally required because of your overseas status.
  • Documentation: You need to provide valid identification documents, such as your passport and PR visa, evidence of your overseas address, and recent bank statements, tax returns, and payslips from your country of residence.
  • Legal and Tax Considerations: PR holders are subject to the same stamp duty requirements as Australian citizens. Some states offer concessions for first-time buyers.
  • Additional Requirements: If you cannot be present in Australia for certain procedures, you may need to appoint a power of attorney to act on your behalf.

Consulting with professionals such as real estate agents, mortgage brokers, solicitors, and tax advisors who specialise in PR overseas property purchase processes is key to navigating the real estate regulations for PR holders smoothly.

Australian Permanent Residents (PR) living overseas are subject to several property taxes when purchasing, owning, or selling property in Australia.

Here are the key Australian property taxes PR overseas may need to pay:

  • Stamp Duty: Stamp duty is a state-based tax on property purchases, varying by state and property value. PR holders pay the same rates as Australian citizens.
  • Land Tax: Land tax is levied annually by state and territory governments on the value of land owned, excluding the principal place of residence. The rates and thresholds vary by state.
  • Council Rates: Council rates are local government taxes for services like waste collection, water supply, and infrastructure maintenance. These are typically paid quarterly.
  • Capital Gains Tax (CGT): CGT is payable on the profit made from selling an investment property. The rate depends on your income tax bracket and the length of time the property was held.
  • Goods and Services Tax (GST): GST is typically included in the price of new properties or substantial renovations. It’s usually not applicable to existing residential properties.
  • Income Tax on Rental Income: Rental income from investment properties is subject to Australian income tax. You must declare rental income and can deduct expenses such as mortgage interest, maintenance, and property management fees.
  • Foreign Resident Withholding Tax: If you sell a property worth over $750,000, the buyer must withhold 12.5% of the purchase price and pay it to the Australian Taxation Office (ATO) unless you obtain a clearance certificate confirming you are an Australian resident for tax purposes.

Although PR holders usually do not need FIRB approval, if required, there might be application fees. Also, Australia has DTAs with many countries to avoid double taxation on income and gains. Check if your country of residence has a DTA with Australia.

Given the complexity of tax laws, it’s advisable to consult with a tax advisor or accountant familiar with both Australian tax laws and the implications for overseas residents to ensure compliance and optimise tax outcomes.

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