The process of financing your new home can be confusing at the best of times, so you’re excused if you find the prospect of financing a new home after moving to Australia a little confusing.
Many migrants from Western countries in particular find the Australian finance market quite different to what they are used to, Typically you can expect financiers to require more paperwork and to subject your loan application to greater scrutiny. This is partly due to government legislation which aims to protect the borrower from predatory lending practices, requiring the bank to demonstrate that they have undertaken due diligence prior to making you a loan offer.
Your eligibility for housing finance will depend upon your migration status. The following eligibility rules generally apply.
- Australian migrants with permanent resident status may borrow up to 95% of the purchase price of the home (in most cases subject to Mortgage Lenders Insurance). Banks will assess borrowings up to 80% of the purchase price without mortgage lenders insurance. Permanent residents are also eligible for the First Home Owner Grant and other government initiatives aimed at stimulating the housing market. Foreign Income will be assessed by banks on a case by case basis.
- Temporary Australian residents may still be assessed similarly to Australian citizens and borrow up to 95% of the purchase price if they hold a preferred visa. A preferred visa such as partner visa which leads to Permanent Residency may still be a concern depending on the circumstances and you may have to pay an increased percentage of stamp duty if you are not classed as an ordinary resident.
- Temporary residents, unfortunately, are not eligible for a First Home Owners Grant. If your spouse is a permanent resident or Australian citizen and the property is purchased as joint tenants, then it may be possible to apply however it would be best to consult your solicitor or conveyancer to get this technicality right.
- Foreign citizens living in Australia with a work visa will be assessed similarly to other temporary Australian residents.
- As a general rule New Zealanders living in Australia can apply for loan finance up to 95% of the purchase price. New Zealanders are eligible for First Home Owners Grant benefits provided that they have lived in Australia for at least 200 days.
Banks will always assess each loan individually and will base their decisions upon a number of factors including capacity to repay, the overall worth of the property, and previous credit history. It would not be unlikely for some banks to give you an agreement in principle and for some banks to refuse an agreement in principle based on your temporary status, even if you are applying with a partner who is an Australian citizen or permanent resident.
It is important to get specialist advice before beginning the process of obtaining finance for your property.