Will Expats Always Get First Home Buyer Interest Rates?
Did you know that a variable home loan is more popular with homebuyers in Australia than a fixed-rate mortgage? Lower monthly repayments and the freedom to switch deals is a clear winning formula for Aussies!
ABS lending indicators point towards an ever-growing trend of variable rate home loans being secured in Australia. Interestingly, fixed rate loan applications are declining. Home buyers are maneuvering home loan interest rates to their advantage!
Where do Australian Expats stand in relation to home loan interest rates? Are you at a disadvantage due to working overseas? Can Expats attract first home buyer interest rates and favourable deals?
Read on to discover everything you need to know about Expat home loans and whether you can secure first home buyer interest rates.
Can an Expat Apply for a Home Loan?
Yes, Expats can apply for home loans! If you are an Australian citizen or permanent resident living overseas, we can help you easily secure a mortgage.
Your status means that you will be able to access first homebuyer incentives as well as some great interest rate deals.
If you are a foreign Expat arriving in Australia, there are additional procedures to take care of. For example, you must ask for permission from the Foreign Investment Review Board before purchasing a property.
Home loans can be confusing in any circumstance, but especially if you are an Expat! Odin Mortgage’s expert brokers will find a solution for every problem and discover your perfect home loan deal.
Which Loan Options are Available to Australian Expats?
Providing you still have Australian citizenship or permanent residency, there is a wealth of loan options for you to consider.
First home buyers can access great interest rates, providing you have a fantastic credit history and a sizeable deposit.
You may also be eligible to apply for a standard home loan if you have owned a home previously. Perhaps you would like to refinance an existing home, or apply for an investment loan to build your own property?
Whatever type of home loan you are looking for, Odin Mortgage can help! We are expert brokers in Australian Expat home loans and will find the best loan product for you!
Get a free Australian mortgage assessment today.
What Interest Rates Can an Expat Expect?
The interest rates available for Expats depend largely on your credit history and financial situation. Remember that the lower your interest rate, the lower your monthly repayments will be.
You could receive first home buyer interest rates of between 2% – 2.5% for a variable home loan. You will not be able to achieve a lower interest rate than this! A great example is the Smart Booster home loan, offering a variable rate of 2.1%.
Ultimately, an interest rate below 3% is considered superb. But, such great rates are typically only available for low-risk applicants on a variable mortgage.
If you want to fix your home loan interest rates, an interest rate of 4% – 5% is usual. What is the difference between variable and fixed-rate home loans, and why are more Aussies opting to choose a variable interest rate?
Should an Expat Choose a Variable or Fixed Interest Rate Home Loan?
Whether you choose a variable or fixed interest rate depends entirely on your own circumstances and own preferences.
Variable Interest Rate
If you choose a home loan with a variable interest rate, the monthly repayments will fluctuate.
You will find that your repayments will increase and decrease now and again. You may be able to achieve a low-interest rate with variable terms, however.
This level of uncertainty may deter some Expats from signing a variable interest rate home loan. You may feel uncomfortable entering a financial agreement whereby the repayments can surge without prior warning.
However, there are many benefits to agreeing to a variable rate home loan. As well as lower interest rates available, you will not be tied to the loan deal. You will have zero exit fees to pay if you decide to switch deals or switch lenders.
You can jump from lender to lender depending on the interest rates and features they are offering. A variable home loan can provide a newly arrived Australian Expat with the freedom you need if your plans change.
Fixed Interest Rate
Whilst fewer Aussies sign a fixed interest rate home loan, a fixed home loan does have its advantages.
You will always know what to expect and how much you will need to pay each month. You can budget your finances better and ensure that you never default repayments.
However, fixed interest rate home loans usually come with a higher interest rate. This means you are paying much more each month for the same amount of money borrowed for your property purchase.
You may additionally discover that moving to a better deal, or selling your house, may become problematic. If you are tied into a fixed-interest home loan, substantial exit fees will be required to release you from the deal.
Paying exit fees can make moving to another deal a poor financial decision as any monthly repayment savings will be lost.
Being tied to a deal may not be a wise decision for an Expat arriving back home in Australia. After a while, you may wish to go back overseas or begin a new adventure elsewhere! A fixed home loan may prevent moving your plans forward in the short term.
How Much Can an Expat Borrow?
The amount of money you can borrow will depend on your borrowing power. Check Odin Mortgage’s borrowing power calculator today for an estimated figure!
To calculate your borrowing power, the following factors will be assessed:
- Your income
- Any assets
- Any debts
- Your expenses
You will also need to prove your ID and evidence that you are an Australian citizen or permanent resident.
As an Expat, proving your income may be more complicated than if you were residing in Australia and paying Australian tax rates.
You may be asked for bank statements and payslips to prove your income. A valid work visa will be sought as well unless you are allowed to work in that country under dual citizenship.
An issue that can affect how much an Expat can borrow comes down to foreign currency and exchange rates. You may work overseas in a country with low tax rates, such as the UAE.
This will mean that you have more money to live on and SHOULD improve your borrowing power.
However, many lenders apply Australian tax rates to your overseas income, reducing how much you can borrow significantly. Some lenders may only offer to use 60% of your income as a figure to assess your borrowing power.
Odin Mortgage can prevent this from happening to you! When working in certain overseas countries, we can negotiate with lenders to use your full earnings to assess borrowing power.
Collate as much financial evidence as possible and we will increase your borrowing power for you!
Visit Odin Mortage’s FAQs to discover more ways that we can help you secure a home loan.
Get a free Australian mortgage assessment today.
How Much Deposit Should an Expat Pay?
An ideal deposit for any home loan is 20%. Securing a deposit of this stature will prevent lenders from requiring you to pay the lender’s mortgage insurance.
LMI is an additional cost for you to factor into your budget. It is generally required when your deposit is below 20% and protects the lender’s interests.
However, as an Expat, it is advisable to place a deposit greater than 20% when purchasing a property. This is due to some lenders valuing foreign currency less than the Australian dollar.
Whilst expert brokers at Odin Mortgage will negotiate high borrowing power for you, a larger deposit will help your application.
How Much Will an Expat’s Monthly Repayments Be?
Your home loan repayments will depend on the amount of money borrowed and the interest rate and loan terms applied.
It is a good goal, however, to ensure that your repayments do not climb above 30% of your monthly earnings. With a surging property market and flat wages, however, this aim may not always be achievable.
Use Odin Mortgage’s monthly repayment calculator today and discover an estimated figure based on your details!
Can an Expat First Home Buyer Access Any Government Incentives?
As long as you are still an Australian citizen or permanent resident, there are first home buyer incentives available to you! You could access the First Home Buyer Grant and the First Home Buyers Assistance Scheme.
First Home Buyer Grant
Providing you are buying a new home that you intend to live in, you could receive a $10,000 grant towards your purchasing costs. You can spend the First Home Owner Grant on anything to do with your property purchase such as toward stamp duty or legal fees.
You must be aged 18 years old and must move into the property within 12 months of completion. This time frame is perfect for the Expat if you need a few months to move back to Oz after living overseas.
You must ensure that you live on the property for at least 6 months, however, or else you may have to pay back the grant. The property must be a new build that no one else has lived in.
First Home Buyers Assistance Scheme
This scheme provides you with a full or partial stamp duty exemption, saving you tens of thousands of dollars. This will depend on the state or territory you are buying a property in.
To qualify for eligibility, you must be a first home buyer and be aged 18 years old or older. You must move into the property within 12 months, once again providing Expats with extra time to move home.
You must live in the property for at least 6 months to enjoy the savings that the First Home Buyers Assistance Scheme provides. Breaching this condition may result in the grant being revoked and you will need to pay the money back.
Can an Expat Apply for the Home Loan Guarantee Scheme?
If you are an Australian citizen, you can still apply for the Home Loan Deposit scheme as an Expat! Unfortunately, Expats with permanent residency are not eligible for this incentive.
There are two Home Loan Guarantee schemes to consider: the First Home Loan Guarantee, and the Family Home Loan Guarantee.
First Home Loan Guarantee
You could pay a deposit as low as 5% if you are successful in your First Home Loan Guarantee application.
The Government guarantees the remaining deposit so the lender does not require that you pay lender’s mortgage insurance.
LMI is usually required if you pay a deposit of less than 20% of the property purchase price. This is an additional cost for you to pay monthly as well as your loan repayments.
Review our First Home Loan Guarantee checklist to see if you are eligible:
First Home Loan Guarantee Eligibility Criteria
Family Home Loan Guarantee
Single parents can purchase a property with a deposit as low as 2% if eligible for the Family Home Loan Guarantee scheme.
You must be an Australian citizen and have at least one child to qualify for the scheme. Once again, the Government guarantees your deposit and so you do not need to pay lenders’ mortgage insurance.
Review our Family Home Loan Guarantee checklist to see if you are eligible:
Family Home Loan Guarantee Eligibility Criteria
(not including child maintenance)
Get a free Australian mortgage assessment today.
Can a Foreigner Apply for an Australian Mortgage?
Expats from foreign countries can still apply for a home loan in Australia. It will cost more money, however, and will probably take longer to meet completion.
The Foreign Investment Review Board is tasked with managing foreign investment in Australia, preventing barriers arising for resident Aussies. You will need to apply to the FIRB and declare your intention to purchase a property in Australia.
This process will take time to reach a decision. You will also need to pay relevant fees in the region of $6,350 for land or property valued under $1,000,000.
It is important to follow all rules and apply them to the FIRB appropriately. Failure to stick to the rules could mean a substantial fine of $3,300,000 and a prison term lasting up to 10 years.
Foreign Buyer Stamp Duty Surcharge
An additional cost to consider if purchasing Aussie property as a foreigner is the foreign buyer stamp duty surcharge.
Stamp duty in Australia can already cost a home buyer tens of thousands of dollars. Foreign purchasers will need to pay around 7% or 8% of the property value as an extra tax.
The foreign buyer stamp duty surcharge adds to a vast array of fees and costs you will be required to pay.
Furthermore, you will not be eligible for any Government incentives to make the cost of purchasing an Aussie home cheaper.
Odin Mortgage can help with any Expat situation, however, finding the best home loan deals for specific and unique circumstances.
Contact Odin Mortgage Today!
Whether you are an Aussie Expat returning home, or a foreign Expat looking to buy property in Oz, we can help you!
We search through a vast range of lenders to discover the best home loan deals for you and your own situation. Our service is free for you to use as our fee is recovered from the lender!
Take advantage of our professional Australian Expat home loans broker advice and contact Odin Mortgage today!
Frequently Asked Questions
Can Australian Expat mortgages get first home buyer interest rates?
Australian citizens or permanent residents with a great credit history can access the best interest rates available! The interest rates will depend on your own personal circumstances and the level of risk your lender perceives.
If you have been living overseas and wish to return to Australia, Odin Mortgage will secure your perfect home loan deal!
What are principal and interest repayments?
Principal repayments are the instalments you pay back to the lender from the money you have borrowed. After each principal repayment, the amount you owe to the lender decreases.
Interest repayments are the instalments you also pay monthly but which go straight to the lender. The money you pay does not reduce the amount you have borrowed.
Can I get an Australian mortgage with foreign income?
Yes, you can still get an Australian mortgage with foreign income! If you still have Australian citizenship or permanent residency in Australia, the process is quite straightforward.
You will need to show full proof of your income and the currency itself may reduce the amount you can borrow, however.
As expert mortgage brokers for Expats, we will negotiate the highest borrowing power for you from a range of lenders. Trust Odin Mortgage to gain the best deal and rates for you!