It is never too early to begin talking with your mortgage broker about your home loan. Mortgages are the main way to finance your property purchase. Knowing the amount of money you can feasibly offer to sellers will help you conduct a more efficient property search.
A pre-approval is issued when you submit documents about your financial and personal situation. This might include payslips (or other details of your income), bank statements, marital certificates, current location, passports, and employment contracts.
During the pre-approval process, Australian banks will complete thorough background checks. When the time comes to apply for your formal mortgage approval, the process should be quick and easy as the vetting has already been completed.
Before applying for your home loan pre-approval, take stock of your current finances. You can use a home loan calculator to work out how much you can borrow. Do your research into what your home loan options are. Expats are entitled to interest-only, fixed-rate and variable-rate loans. We’re happy to assist foreign investors with their options.
All you need to do then is to fill out the pre-approval form and submit it to a relevant credit provider. Lenders are often wary of offering loans to anyone other than Australian residents. Different banks will have different lending policies when it comes to foreign investors. There are several potential outcomes from your home loan pre-approval application.
- Declined – Unfortunately, foreign investors regularly see their loan applications declined. As a non-resident, you are at higher risk to the lender. With fluctuating exchange rates and the bank’s inability to efficiently cope with overseas customers, some lenders outright decline any foreign investors.
To make this step easier, seek approval from a specialist brokerage, like Odin Mortgage.
- Lends with restrictions – You might find that your loan pre-approval application comes back asking for additional information or supporting documents. Lenders are often hesitant to take foreign income into account when considering your loan application.
You might also see that the loan amount is restricted; banks may lend up to 80% of the purchase price. However, overseas investors may not get this much.
- Special lending parameters – a rare response from lenders, special lending parameters means that the bank offers you a loan without or with minimal restrictions. These banks have special credit teams who are experts in overseas loan applications.
Remember, your home loan application might incur some additional expenses beyond the purchase price. Generally speaking, it is a good idea to reserve an extra 5% of the property value to pay for additional services. These might include loan establishment fees, legal fees, foreign citizen stamp duty, FIRB approval fees, property inspection fees and buyer’s agent fees.
In addition, there are the usual building and maintenance costs that build up with the purchase of any new property.borro