How Easy Is It To Get a Mortgage in Australia?
Do you know how hot the Aussie property market has been in recent years? Everyone has been looking to invest in a property Downunder, with demand surging to unprecedented levels. With rising interest rates demand is slowing and prices are beginning to stabilise.
Securing your mortgage deal in Australia is simple with Odin Mortgage. Our professional brokers are experts in securing expat mortgages, as well as home loans for foreign investors.
But, how can YOU apply for a mortgage in Australia with Odin Mortgage, and how easy is the process?
What Is a Mortgage Called In Australia?
Mortgages in Australia are usually called ‘home loans’, although brokers and lenders will still understand what you mean by the word ‘mortgage’.
The systems which operate home loans in Australia are similar to other countries in the world.
However, if you are not currently living Downunder, accessing the services of a broker is advisable. Odin Mortgage brokers are experts in Australian expat home loans! We can help you to get approved for a mortgage in Australia to buy your home.
Can I Get a Mortgage in Australia as an Expat?
Australian expats can easily get a mortgage in Australia with the help of Odin Mortgage!
If you are an Aussie citizen or Australian permanent resident, we can help secure your home loan quickly if you are planning to move back to Oz or wanting to buy an investment property.
A great range of home loan deals and terms are available to you, placing you at no disadvantage to resident Aussies! You will need to provide a wide range of evidence to prove your income, however, and foreign currency.
This can make the initial application process more complicated so using the services of a broker will provide you with peace of mind.
We can match your circumstances to a range of lenders and perfect home loan products, securing you the best options available!
Get a free Australian mortgage assessment today.
Are Mortgages in Australia Available to Foreigners?
Foreign citizens can apply for a mortgage in Australia, although there are more complicated terms and requirements to meet.
Lenders will assess your borrowing power and any income earned inside and outside of Australia.
You will need to inject a larger deposit into your home loan application, however, perhaps 30% – 40% of the property value. Higher interest rates in the region of 8% may also be a typical offer on the table for foreigners applying for Australian home loans.
Even if you are accepted to secure a home loan in Australia by the lender, you will need FIRB approval.
The Foreign Investment Review Board
The Foreign Investment Review Board monitors the number of foreign investments in Australia. This ensures that the level of foreign investors Downunder is maintained to prevent resident Aussies from facing a disadvantage.
You must pay a fee of several thousand dollars when applying to the FIRB, and demonstrate why you want to invest in Australia.
However, higher interest rates and the FIRB fee are not the only extra costs you will need to pay.
Stamp Duty Surcharge
When buying a home in Australia as a foreigner, you will have to pay a stamp duty surcharge.
This amount is usually around 7% or 8% of the property value, with the exact amount varying from state to territory. Luckily, there are no foreign stamp duty surcharges payable in Tasmania, Northern Territory, or Australian Central Territory.
You will need to pay the standard stamp duty rate applicable to Aussie citizens and permanent residents in addition to the surcharge.
Typically, stamp duty fees are tens of thousands of dollars. This will vary according to the state or territory you are buying a home in, as well as the property value.
Find out how much stamp duty you will need to pay today by using our Stamp Duty in Australia Calculator!
Enter your details into the calculator, including whether you are a foreign purchaser. Receive an instant calculation regarding the total stamp duty fees and surcharge you will need to pay!
What Types of Mortgage Are Available in Australia?
Mortgages in Australia include fixed rates, variable rates, and split-rate mortgages. Each type of mortgage in Australia offers a range of benefits and some considerations to be aware of.
Fixed Interest Rate Home Loan
A fixed rate loan is a home loan option that includes a fixed interest rate. You will agree to a fixed interest rate that will remain the same throughout your loan term. Your monthly repayments will remain the same throughout.
Odin Mortgage can secure you a great interest rate for a mortgage in Australia, typically around 4%. Some lenders may allow you to take out a fixed-rate mortgage across 15 years.
However, most lenders prefer a fixed rate home loan in Australia to reach no further than 5 years. Many homeowners choose a fixed term of 2 to 3 years so they are free to switch to different competitive rates once the term expires.
Remember that a fixed interest rate home loan will require an exit fee if you decide to sell the property before the loan has expired.
Variable Interest Rate Home Loan
Variable interest rate home loans can offer a much lower interest rate in the region of 2%. This could result in lower monthly repayments in comparison to fixed-rate mortgage repayments.
However, the amount you pay per month is likely to change on a variable basis. The amount may move with Reserve Bank of Australia rates. In these circumstances, you could find it difficult to plan and budget your repayments if the interest rate increases.
You will be free to switch to a different deal or sell your property without paying an exit fee, providing you with greater flexibility.
Check out the latest variable interest rate loans for mortgages in Australia today!
Get a free Australian mortgage assessment today.
Split Rate Home Loan
A split rate home loan enables you to enjoy the best of both worlds. Part of the home loan is in a fixed interest deal to provide you with some security.
However, the remainder of the home loan is split into a variable rate portion so you can enjoy a lower rate. A split-rate home loan is a modern way to take out a mortgage in Australia!
What Are Principal and Interest Repayments?
Your monthly home loan repayment consists of a principal repayment amount, and an interest repayment amount. You may pay these amounts as one single repayment instalment each month.
Your principal repayments are the money you pay each month that decreases the total money you borrowed from the lender.
Your annual mortgage statement will show you how the amount you owe the lender decreases month after month.
Your interest repayment is the money you pay each month to the lender as interest on your home loan. None of this money will reduce the total money you owe on the home loan. You simply pay interest.
You could apply for an interest-only mortgage with your lender. This reduces your monthly repayments as you will only pay the interest repayment amount, not the principal repayment total.
If you choose to adopt an interest-only mortgage, you will not be able to reduce the amount of money borrowed on your home loan. You will simply pay the interest payable to the lender.
This is still a good option if you want to keep your monthly expenses low. Increases in the property market and a rise in your property value will depend on your ability to sell, however.
How Can I Apply for a Mortgage in Australia?
Apply for mortgages in Australia with the help of your expert brokers at Odin Mortgage. We will find the best deal with your perfect lender to meet your circumstances and needs!
Read our FAQs to find out how you can start the process with Odin Mortgage today!
You will need to meet the following required eligibility criteria to apply for a home loan in Australia.
Home Loan Eligibility
Proof of your identity (passport, driving license)
A good credit score (above 650 is a great target)
Evidence of your income (3 months of payslips, employment contract)
Two to three months of bank statements (showing expenses and repayments)
Evidence of any assets (house, car, savings)
Evidence of liabilities (credit cards, car loan)
As an Australian citizen working overseas, we will find you the best home loan that is available to resident Aussies. You could achieve some great rates, depending on your financial situation.
As a foreigner buying property in Australia, we can still get you a great deal! You will be faced with higher interest rates and greater costs to pay. The FIRB application and the stamp duty surcharge will cost you a considerable sum of money!
Whatever your circumstances, Odin Mortgage brokers can help you secure your perfect Australian mortgage deal!
What Size Deposit Will I Need?
An Australian citizen or permanent resident in Australia can easily secure a home loan with a 20% deposit. A 20% deposit is the preferred loan size as it provides you with 20% equity in the property you are buying.
Your lender will feel secure that the equity in the property will safeguard their interests. If you do not have a 20% deposit, some lenders will accept a smaller amount. However, you will be required to pay the Lender’s Mortgage Insurance.
Lender’s Mortgage Insurance is a simple mortgage payment to safeguard the money borrowed from the lender. None of the money you pay in LMI will reduce the money you have borrowed. Many people view this expense as waste and so try to save a 20% deposit.
How Much Could I Borrow With an Australian Mortgage?
Check out our Borrowing Power Calculator and find out today an estimated amount that you could borrow for your home loan!
Your borrowing power will determine the amount of money you could borrow to buy a home Downunder. But, what will lenders consider when calculating your borrowing power?
For example, joint applicants earning $200,000 combined with 2 children could borrow $2,178,000. This includes $2,328 living expenses per month, as well as a $300 car loan payment and zero credit cards.
A single applicant earning $150,000 per year could borrow $1,702,000. This is based on a $3,000 credit card limit, $500 car payment, and $1,678 monthly living expenses.
Here are the factors your lender will assess to determine your borrowing power:
The larger your deposit, the more options you will have available to you! Lenders love a sizeable deposit. After all, you will be less likely to default repayments if you have invested a large sum into the property.
Lenders will also see large deposits as security that they can seize if you did default your repayments.
It is important to declare all of your income, including income earned overseas. Do you have any additional seasonal or freelance work that should be declared?
The higher the total income evidenced in your application, the higher your borrowing power will be.
If you are applying as joint applicants with your partner, your total income will be considered and will increase the amount of money you could borrow considerably.
Get a free Australian mortgage assessment today.
Do you have any assets to include in your application? Typical assets may be your savings or a house that you already own, particularly if you own the property outright.
Considerable savings will show your lender that you are financially responsible and a good prospect as a customer.
You will need to evidence how you spend your money each month. Regular, frivolous expenses may indicate to the lender that you spend money recklessly.
Do you have any other debts, such as a credit card or overdraft? Do you pay your repayments on time? Lenders will consider your current behaviour and assess the likelihood that you will pay repayments.
However, you must cancel any unused credit cards or pay off any used amounts as quickly as possible. Any credit limits granted to you are counted against your borrowing power, whether you have used the credit or not.
So, you have a $10,000 credit card but only owe $35 on the card. Unfortunately, the full $10,000 limit will be counted in your borrowing power application, not the $35 used.
Lenders consider your dependents as additional expenses and will ask how many dependents you have in your application. It may be a wise move to apply for a home loan before you have children!
7. Credit Score
Your credit score is based on the history of your financial activity. Once per month, your credit card or loan lenders will inform a credit reference agency if you have paid on time.
Positive actions will increase your credit score, but defaulting repayments will decrease your score. But, what is a good credit score for a mortgage in Australia?
You should typically aim to get your credit score above 650, although different agencies measure your score differently.
How Much Will My Monthly Repayments Be?
Find out how much you could pay per month on your Australian mortgage with our Monthly Repayment Calculator to estimate your monthly mortgage repayments!
You will receive an instant estimation to help you in your home loan budgeting plans. Typically, you should aim to spend no more than 30% of your monthly income on home loan repayments.
Repayments will also differ depending on whether the property is to be lived in or is an investment property. Investment loans will come with different interest rates.
We can find you a great deal to keep your repayments as low as possible. You could also reduce monthly repayment by using a larger deposit or using interest-only loans.
Contact Odin Mortgage to Secure Your Mortgage in Australia!
Get in touch with Odin Mortgage today and request a call about your home loan purchase! Our experts will help you secure a home loan to buy a property in Australia, or save time and money by refinancing an existing home.
We are Australian Credit Licence holders so you know you can trust our up-to-date advice!
Discover exactly what an Expat mortgage broker can do for you at Odin Mortgage, and contact an expert mortgage broker today!
Get a free Australian mortgage assessment today.
Frequently Asked Questions
What home loan interest rates can I get as an Expat?
If you hold Australian citizenship, some great rates could be available to you
How can a mortgage broker help me?
A mortgage broker thoroughly knows the property market and what deals are available.
Odin Mortgage’s expert brokers will assess your information and let you know which lenders and which home loans meet your circumstances. We can negotiate with lenders to get you better interest rates!
Furthermore, we never take a fee from you! Our service is free for you to use as we recover fees from the lender. Contact Odin Mortgage today!
Is a variable rate or fixed rate better for an Expat mortgage?
Whether you accept a variable rate or a fixed rate depends on your preference and your circumstances.
If you are an Expat who is constantly on the move around the globe, then a variable rate may be a good option for you. You will not be tied to the mortgage terms and could sell the property whenever you wanted to.
However, fixed rates offer you some security, particularly in an unstable market.