Tips for Financing a Property in Australia

Australia Property Loan

If you’re an overseas investor (or an expat) looking to buy property in Australia, there’s plenty of good reasons to do it.

There’s also some smart tips you should follow to make sure the process goes as smoothly as possible. Here’s what we recommend.


1. Save for a deposit

The more deposit you can save, the better. With the recent lending restrictions, non-residents of Australia (foreigners) generally can borrow up to a 70% loan-to-value ratio (LVR) without the need to take out any lender’s mortgage insurance (LMI). In the past,  non-residents could borrow up to an 80% LVR if they took out LMI.. Watch this space as the lending market evolves to a new normal.

You’ll also need to have enough money to pay for potential additional purchase costs, which can include:

  • Loan application fees.
  • Stamp duty. This is a government tax levied on property purchases in Australia.
  • Property inspection fees (e.g. from local building and pest inspectors).
  • Buyer’s agent fees (e.g. local agents to help you locate, negotiate and bid for suitable investment properties).
  • Any legal expenses associated with your Australian property purchase (e.g. conveyancing).
  • Approval from Australia’s Foreign Investment Review Board. If you’re a foreign investor looking to buy real estate in Australia, you need government approval.

 2. Have a budget in place

A budget will help you to save for your deposit.

It will also help you to demonstrate your ability to make your loan repayments, increasing your chances of being approved by a lender.

Having a budget also helps you to develop good habits in managing your everyday expenses. Planning for principal and interest repayment on your loan is recommended since interest-only mortgages are being reviewed (especially for non-residents).

3. Reduce your current level of debt

The less debt that you currently have, the more you’ll be able to afford to borrow for your Australian investment property.

This will increase your chances of buying a quality property in a location that has the best potential to generate rental income and future capital growth for you.

And if you currently have personal loan or credit card debt, be aware that you are likely to be paying higher rates of interest on that debt than you will with a home loan. It can be a smart strategy to consolidate all your debt into one low-interest home loan to make your finances easier to manage.

Borrowing in Singapore is subject to a total debt servicing ratio (TDSR), which is a measure of how much you can borrow. If you look to lenders in Australia, each one implements their own serviceability assessment which is different to the TDSR. This results in different  financing amounts being available in each country.

4. Arrange a pre-approved loan before you buy

That way, you’ll know what Australian investment properties you can afford. And you’ll be in a much better position to negotiate the purchase price!

5. Use a mortgage broker

At FindAHomeLoan, providing mortgage broking services for investors looking to buy property in countries like Australia is one of our specialities. Whether you’re looking for a new loan or to refinance, we can provide detailed advice and assistance.

We have a network of partners including lawyers, accountants and bankers to guide you through the international property investment process.

We work on a no-fee model until we find the right loan for you. We would be happy to speak or meet with you to discuss your needs and goals.

We’ll take the time to understand your circumstances and provide the best advice.

Contact us now to find out how we can help you!

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