Refinancing Australian Property Loans As An Expat
Buying a property is on everyone’s bucket list – it shelters you in a storm, keeps you warm on cold winter nights, and, most importantly, gives you a sense of freedom and security. While we all want to own a house and transform it into a snug and cosy home, many tend to be held back by the brutal housing market.
But what if we tell you that there is a hassle-free method to invest in a suitable Australian property?
Let us tell you the right way to choose the best property loan in Australia.
Get a free Australian mortgage assessment today.
How to know if you can refinance your home loan
Most Aussies, foreign nationals, and temporary residents wish to invest in a property that is worth every penny. It is always wise to ask for professional opinions, as we can help you buy your property of choice at the best price. At Odin Mortgage, our experts are available for consultation on Australian property loans seven days a week.
Generally speaking, you could apply for loans with an LVR of 80% or less, as the property itself serves as security.
Property investors in Australia can claim 100% of their mortgage interest expense as a tax deduction and negatively gear their investment property. The property gives long-term returns when the property’s value increases over time. You can rent it out and receive rental income (essentially more money).
Compared to an investment in the share market, investment in a property gives you complete control. It is your property, and no one can tell you otherwise, so you can make investment decisions to maximise the value of your property and make the most out of it. You can also do certain things to repay the home loan quicker (we’ll get to that in a bit).
How long does it take to refinance your home loan?
In Australia, the time it’ll take for you to refinance your home loan depends on several factors, which may include:
- Complexity of your mortgage application: One major factor that affects this period is the documentation requirements. As an expat, you may need to provide additional documentation, such as proof of income and residency, which can take longer to obtain and process.
- Lender’s processing times: Some lenders may be able to process applications more quickly than others, so it’s important to research and compare different lenders to find one that can meet your needs.
A typical refinance can take from a few weeks to several months. Overall, it’s best to allow several weeks for the refinancing process and to work closely with your lender to ensure a smooth and timely process.
Current lending market conditions
Different home loan options in Australia nowadays can confuse a lot of beginners, which might put them off from getting one. If you are new to the real estate sector in Australia, you should reach out and get a free consultation with us. We’ll walk you through the different processes of getting a property loan in Australia.
You must be well informed and aware of the minimum deposit that Australian lenders will accept and the amount you can borrow. Lenders will consider your financial situation and other factors to decide on how much they can lend you without overstretching your financial capacity.
- Mortgage interest rates are at the lowest point in history.
- The Reserve Bank of Australia (RBA) has stated we will be in a low-interest-rate environment until 2024. The inflation rate is to be between 2-3% and job growth to return to pre-COVID levels before rates start to increase again.
- You’re able to get a 30-year loan tenure regardless of age.
- You can make Interest-Only repayments with a slight premium, although most clients opt for Principal & Interest.
How do you get a loan to invest in property?
Comparing the cheapest home loan interest rates in Australia is something we will help you do. You can talk to one of our mortgage experts so we can provide you with options that cater to your needs.
Next up is to complete our quick online assessment. You will then receive a comprehensive evaluation of your maximum borrowing capacity and lender options with the rates and fees.
Once you have decided to proceed with the home loan application, we will guide you through our quick and easy document collection process for application submission. We strive to provide you with the most stress-free experience.
Buyers would only be required to provide basic documents, such as passports, driving license copies, income certification letters and the first page of the house purchase contract. Up to 80% of loans are approved. The interest rate and product functions are precisely the same as those of local Australian customers.
Australia’s developed financial industry has made Aussie expats even more powerful, and some support is not even available for local buyers. If the buyer can only pay interest in the first five years, the principal can be put on hold temporarily. The buyer can then easily “provide a house with a house”. If the house appreciates, there will be no need to sell the house and do a reassessment. It is very convenient to cash out the value-added part, turning “dead money” into “living money” and realise a rolling investment.
Most Australian financial institutions provide 80% of housing loans, with some financial institutions lending more than 80% and 50-60% of the purchase price for commercial properties. But for loans higher than 80%, you must pay a certain percentage of mortgage insurance which may be quite hefty. This one-time fee goes towards the lenders for covering them when the borrowers do not make the repayments.
Unlike many countries, the Australian housing loan interest rate can be divided into Owner-occupied Housing Loans and Investment Housing Loans, depending on the purpose of the buyer’s purchase. The interest rate for investment housing loans tends to be slightly higher than owner-occupied housing loans. Generally, as an Australian expat, you will be buying for investment as you are not currently residing in Australia to live in the property.
Everyone knows that housing loans’ interest rate is a susceptible number, but few people have studied how much difference this number will have.
According to statistics, the gap between the highest mortgage interest rate and the lowest mortgage interest rate offered by central Australian banks and lending institutions has reached 1.7% (30-year loan interest difference is as high as A$370,000!). This comparison is based on a quota of 1.024 million, close to the median house price in Sydney.
By choosing this method, the lender can repay the interest on each repayment within five years. The amount is relatively low and will be completed at maturity. This kind of repayment method is suitable for buyers purchasing real estate. Investors expect real estate to increase rapidly.
Once the investment expectations have been reached, they will be resold for profit. Throughout the investment period, investors only need to pay a small amount of interest to complete the investment.
Home loan rates in Australia
More than 70 banks and financial institutions in Australia are giving loans, and nearly 80% of customers choose the four central banks.
This is despite the four central banks in Australia having a higher average housing loan interest rate. You can check the current interest rates for the big four banks here.
Relatively more minor banks and small lenders often offer relatively lower mortgage interest rates, as is required to compete with their larger competitors’ network effect and online banking capabilities. Often, these smaller lenders offer a better cost-saving alternative and should not be ignored.
The Australian Competition & Consumer Commission (ACCC) released an interim survey report on the lending rates of Australia’s four central banks and Macquarie Bank (Macquarie) and found that the mortgage information released by significant banks to mortgage customers was “not transparent”.
Before you decide to go with the big banks, come to us and see whether you would benefit more by borrowing from lesser-known lenders.
Cheapest home loan interest rates in Australia
On November 3, 2020, the Reserve Bank of Australia (RBA) announced lowering the official cash rate from 0.25% to 0.1%, a record low. The interest rate cut mainly aims to stimulate the economy out of the technical recession caused by the COVID-19 epidemic.
Traditionally, Australian housing loans are mainly floating-rate (variable) loans, which can be linked to offset transaction accounts. Variable loans can also be refinanced at any time, unlike fixed loans with “locked-in” terms with break-cost penalties.
Since the November 2020 rate cut, all four major Australian banks, Commonwealth Bank (CommBank), Westpac Banking Corporation (Westpac), the Australian and New Zealand Banking Group (ANZ), and the National Australia Bank (NAB), have reduced interest rates substantially on their fixed-rate and variable-rate mortgage products.
Smart and successful lenders in Australia have their own metrics and qualifications for assessing loan applicants. They focus on many vital aspects of the home loan applicants and follow different terms and conditions. There is no specific formula or rule on how much the applicant will be approved for the home loan.
Some of the critical factors Australian lenders consider while deciding whether the applicant is qualified for the loan are the borrowing capability of the applicant, the purpose of the loan, property prices, credit history, and other things. Our article on maximising your borrowing capacity as an overseas resident earning foreign income is a must-read.
Home loan calculators
Use different calculators to help you calculate your ability to borrow, the cost of house decoration, monthly payment and stamp tax.
Our online home loan calculators can provide you with a complete guide and will provide suggestions on how to make an informed decision to qualify for a home loan. You will get a basic idea of home loans, which will help clarify your doubts.
- Mortgage Repayment Calculator
- Borrowing Power Calculator
- Investment Property Calculator
- Stamp Duty Calculator
Guidelines for qualifying for home loans in Australia these days catch the attention of everyone and increase their overall interest in applying for a home loan directly. You should pay attention to several things: your credit history, commission as income, mortgage brokers, proven savings, affording repayments, and credit card transactions.
Odin Mortgage will save you the hassle and thoroughly inspect all your documents while appraising your application and help you decide which home loan to go for.
Refinancing property loans for expats
Although refinancing property loans for Aussie expats is a common practice in Australia, it can be more complex than refinancing for Australian residents. As an expat, you may need to provide additional documents as evidence of your income and residency status, and, of course, you may face stricter lending criteria from the lenders.
To apply for a refinance as an expat, you’ll first need to compare different lenders and find the right lender who provides the refinancing option you need. Second, you need to prepare the necessary documentations, which may include:
- Proof of income, such as tax returns, payslips, or bank statements.
- Proof of residency, such as a visa or residency permit.
- Property valuations and mortgage statements.
- Identification documents, such as a passport or driver’s license.
Once you have the necessary documentation, you can submit your application to the lender for review. The lender will assess your application based on their lending criteria, which may include factors such as your credit score, employment status, and financial history.
If your application is approved, you can proceed with the refinancing process. This may involve paying off your existing loan and taking out a new loan with a different lender or renegotiating the terms of your existing loan with your current lender.
Overall, refinancing property loans in Australia for expats can be a complex process, but it can also offer significant benefits, such as lower interest rates, lower monthly payments, or access to equity in your property. Our specialist expat mortgage brokers at Odin Mortgage can help you connect with the right lender to begin the refinancing process.
Can foreign nationals get a property loan in Australia?
The Australian government has always supported the real estate industry as it is one of the primary pillar industries in the Australian economy. One of the most important policies is encouraging people overseas to buy Australian real estate as part of their investment portfolio.
When you buy a house in Australia, you can enjoy the same policies as Australian residents: national treatment. As long as the buyer is not a person that the Australian government considers harmful to the national interest and the property purchased is not a historic property that is prohibited from being sold on the Australian historical and cultural heritage list, your application is usually approved within two weeks. From this point of view, the requirements for overseas buyers are very lenient. They can choose where to buy, what to buy, and how many sets to buy.
Note that Australia restricts the types of properties that foreign buyers can hold. For example, foreigners can only buy off-plan and first-hand new houses; international students can buy homes, but they can only live by themselves and not rent out if there is no identity or stay after the visa expires. If you start working, you must sell the property.
While the Australian government is okay with foreign nationals buying properties in Australia, the banks and lenders must follow stricter guidelines on who can lend money. For those who don’t have an Australian passport, it has become more challenging. Most foreign nationals should prepare for an LVR of 60-70% with slightly higher interest rates or fees.
Apply for an expat refinance with Odin Mortgage!
Applying for a loan and buying real estate in Australia while away from home can be quite confusing and daunting, but don’t worry.
Odin Mortgage is here for you and will guide you through the entire process seamlessly. We will work out which lender can offer you the best interest rates, terms & conditions and advise you of your prospects of obtaining finance so we got your back.