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[MoreMore Insights] Can Foreign Investors Get a Mortgage?

Many countries are not allowing temporary visa holders to get a mortgage. But in Australia, temporary visa holders or foreign investors can get a mortgage when buying properties.

Who are Classified as Temporary Residents and Foreign Investors?

- Temporary residents mean people who hold a temporary visa and validity of the visa can continue to stay in Australia for more than 12 months, or who live in Australia and submit an application for permanent resident visa, or who have a bridging visa and can stay in Australia until permanent resident visa is issued.

- Foreign investors refer to those who do not hold any visas or who hold temporary Australian visas with a validity period of less than 12 months, such as tourist visas.

Eligible Lenders

Temporary residents can choose to apply for loans with citizens or permanent residents together. However, it should be noted that some banks may accept temporary residents' income in this case, but some may not, which will affect the borrowing capacity. At the same time, temporary residents may also apply for home loans themselves, but it could be complicated and depend on each applicant’s visa type and each lender's policy.

Generally speaking, first tier banks do not lend to temporary residents or foreign investors, and second/ third tier banks are becoming less tolerant as well. Professional mortgage brokers can provide great help to those who are looking for home loans. Feel free to contact us if in need.

Limitation of Purchase

When buying a property in Australia, both temporary residents and foreign investors must firstly apply to FIRB. Temporary residents and foreign investors can buy new homes and vacant land. Vacant land can only develop residential home, which should be constructed within 24 months after settlement, and completed within 4 years. However, foreign investors cannot buy existing homes, while temporary residents only can buy one existing owner occupied home and cannot rent it for investment. Once their visa expires or move out of this property, they must sell the property.

Extra Cost

Temporary residents and foreign investors will pay more fees than Australian citizens or permanent residents, especially the FIRB application fee and stamp duty surcharge. From 2024 financial year, the minimum fees rose to $4,200, and maximum fees went up to $1.11 million. One thing to remember is that one should apply to the FIRB first, then decide on the price and area of the property in order to pay the application fee, which help to get a 12-month exemption permit, and have more time to choose property and negotiate price. And in addition to the standard stamp duty when purchase a property, temporary residents and foreign investors may need to pay stamp duty surcharge and land tax surcharge as well. In NSW, stamp duty surcharge is 8% of the property value, and land tax surcharge is 2% of the property value.

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