Australia properties are evergreen and popular with foreigners. However financing or buying property in Australia could be a pitfall if you are not careful or ill-advised. This is a must read to learn the right things and avoid the mistakes many investors make regarding Australia property loans.
Australia Mortgage Lowdown
Australia property market has been on the uptrend for few years. It’s one of the few bring spots in 2017. It’s also a natural destination for non-residents or foreigners to invest in. Prices are not unaffordable while rental yield is above average. However the mortgage market unravelled from 2015 towards non-residents buyers (also known as FIRB buyers).
Banks and lenders in Australia stopped lending to non-residents after many years of granting approvals. The sudden decision shocked many, leaving them no option to borrow. Some defaulted on the purchase or some raised sufficient cash to buy it outright.
But not all hopes are lost. We have many non-resident buyers who took our advise and went on to successfully obtain Australia mortgages and built their investment portfolios. Their rates range from 3.5% to 9%. At the same time, we built up our mortgage experiences over the years.
I will share some criteria that banks consider to grant you loans.
This is an important criteria. Which country are you a citizen of? Where are you working? Do you hold a valid Permanent Resident visa in Australia?
How much do you earn? Are your income and tax documents acceptable? How complete are the supporting documents? Some banks do not accept foreigners who are self-employed.
Many Singaporeans felt that the TDSR framework introduced by MAS was very strict. They are mistaken. Australia way of computing servicability or debt-servicing ratio (DSR) is even stricter. Do not make the mistake of assuming wrongly.
While the globally accepted mantra about property investment is about location, location and location, however you must accept that banks and lenders have their own risk management policies. What is fantastic to you may not be acceptable to banks. Where you wish to stay could be an area banks avoid.
Are you aware there are banks that may not lend to apartments with internal sizes less than 50sqm? Do you know there are different definitions of measurements – strata size vs architectural size? Looking at the incorrect definiton of size may result in one less bank to consider.
Yes you love to own a land and build your dream home with 5 bedrooms, garage, landscaping and 2 kitchens. But… have you check out the mortgage options for land and build/ construction?
These are some of the factors that we consider, as part of our advisory work to non-residents buyers. Lending options are aplenty still in 2017, given our strong and deep experiences as seen in our Australia Mortgage Portfolio!