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Tips for immigrants when applying for a mortgage in Australia

/ / Life in Australia, Our latest posts

applying for a mortgage in australiaThe Land Down Under is a top destination for immigrants across the world. With a stunning natural beauty, a favourable climate, a strong and growing economy, a world-class education system, and a multicultural society, it is no wonder so many are attracted to work, study, or live in Australia.

Buying a new home in Australia

The local government has introduced policies to make it easier for immigrants to settle into life in Australia. And with housing being a basic need for newcomers, the government has several programmes for making the house buying process an easier experience.

Real estate is booming in Australia and the property available is largely varied. However, take note that apartments in the city can be much more expensive than double storey homes in the outer suburbs. This is mainly due to the current housing shortage, particularly in major cities like Sydney, Melbourne, Brisbane, and Perth.

Eligibility criteria when applying for a mortgage in Australia as an immigrant

Funds for a new home must be a major part of your financial planning when relocating. Banks and lenders in Australia provide loans for immigrants and may even have special mortgage products or ‘non-resident loans’. However, you should take note that because immigrants generally don’t have credit files yet, banks and lenders will usually use different criteria for eligibility. This may include the following:

  • Visa status – Your visa type is a major factor in determining the amount you can borrow and repayment schemes.
  • Employment – It is beneficial to have guaranteed employment in Australia before applying for a mortgage. Your local and overseas work history may also be included in the screening process.
  • Ability to repay – This includes your minimum income, living expenses, and repayment of other current debts.
  • Assets – They may assess your assets and liabilities and compare these with your age and income.
  • Security – They may assess the value and saleability of the property (usually the one you are buying) that you are giving as security for your loan.

Since they do not have access to your credit history in your country of origin, some banks and lenders may also ask for evidence of overseas bank accounts and liabilities to see how you manage your money. Some may also require you to have an account with a bank in Australia.

Your borrowing power as an immigrant

It used to be that almost all temporary visa holders in Australia could borrow up to 95% of the property value. However, due to recent changes to lending policies and stricter requirements, this now applies only to:

  • Those with a spousal visa;
  • Those waiting for permanent residency;
  • New Zealand citizens living in Australia.

According to Migration Alliance, borrowing power for temporary residents has been reduced to 60-70% of property value. There are some lenders who allow you to borrow up to 80-90% if you are financially stable and have employment security.

applying for a mortgage in australia

Additional helpful tips

  1. There are some differences in applying for home loans in Australia compared to other countries. Banks may be more conservative but more disorganised. They may require more documents and take longer in processing your mortgage application.
  2. If you have the resources, work with experts in Australian immigration, real estate, mortgage brokerage, and other professionals who can make your relocating and house buying experience simpler and faster.
  3. Pay off any existing debts and be in a good financial position to have better chances of getting a more attractive and faster home loan offer.
  4. Do your research before immigrating so you already know your financing and housing options in Australia, as well as the necessary documents you have to prepare and bring with you.
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