What to Expect When Getting a Home Loan in Sydney as an Expatriate

The team at Savvy provided Sydney Moving Guide the content for this post.

Those who marvel at the harbours and beaches of Sydney from countries far away wouldn’t be considered daft if they tried to live there one day. Sydney is one of the most beautiful cities in the world – which also makes it one of the least affordable cities, too. For many of us, purchasing property in Sydney as an expatriate may be a complex, if not rewarding process. Here is a guide to securing a home loan for your property purchase in Sydney so you know what to expect.

Securing a Home Loan in Sydney

Look at Your Property Options

The first thing you should do is look at houses that fit your lifestyle and budget. It’s worth noting that the median house price in the inner and middle Sydney suburbs for a three-bedroom house is AUD $929,000. The overall median house price is a shade over $1 million AUD. The cost per square metre is only lower to premium capital cities such as New York, London, Singapore and Hong Kong. If you are prepared to live in a house or apartment that’s affordable and appropriate, you can find a good house for your purposes. Some real estate agents or buyers’ advocates (people who find homes and negotiate on your behalf) can help you look at a range of homes that fit your requirements. Some buyers’ advocates can start looking before you land in the country.

Getting Foreign Investment Review Board Approval

If you or your buyer’s advocate have found a specific property you wish to purchase, you will have to wait for clearance from the Foreign Investment Review Board (FIRB.) You cannot commit to purchasing a property in Sydney without FIRB as a non-Australian citizen or permanent resident. You can apply for approval online and get a response within 30 days. Foreign citizens will find it hard to buy an established or second-hand property and gain approval. You will have a much better chance buying a new dwelling, defined as this:

“A dwelling that has not been previously sold by the developer and has not been previously occupied (such as, by tenants) for more than 12 months.”

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You can buy property that has undergone major refurbishment (e.g., a warehouse conversion) or buy a property you intend to knock down to build something new. You can also purchase “off the plan” property approved for development but not built yet.

You should NOT attempt FIRB approval without an attorney (or solicitor as they are called in Australia.) There are many complex legal requirements around buying for residential purposes and investment purposes.

Arranging Mortgage Finance

An expat can arrange mortgage finance one of two ways – with foreign currency and with an Australian financial institution.

A foreign currency loan may be available to you for lower than the current Australian interest rates. (Though, at time of writing, the official Australian cash rate is at a record low 1.75%.) However, your loan is subject to rises and falls in the currency of your choosing, and your bank may ask for capital injections if the loan to value ratio exceeds agreed minimum levels.

You can opt for a mortgage in Australia from an Australian bank or lender, however you may need to put up to 20% deposit (though it can vary from 5% to 30%) before a lender will approve a foreign national. You will have to provide extra documentation such as visa information + expiry, proof of income, proof of funds transfer into an Australian bank account and if possible, references. Some lenders may charge higher interest rates compared to residents. However with a reputable broker that knows the market, you can get favourable rates that approach or match prime mortgage rates.

Other important facts to consider

Even though you are buying a new home for the first time in Sydney, you will not be eligible for the Federal Government first homebuyer’s grant or the NSW Government first home buyer’s grant. You should also know that purchasing property in Sydney is subject to FIRB application fees and NSW stamp duty, calculated as a proportion of the house’s sale price.

You should always consult a professional at every stage of your house-buying journey. Sydney is home to some of the best immigration, tax, conveyancing and property attorneys – so don’t go it alone!

About the Author: Bill Tsouvalas is founder and CEO of Savvy. When he isn’t helping Australians find great deals on car and home loans, he’s out revving up his car around the highway.

Disclosure of Material Connection: This is a “sponsored post.” The company who sponsored it compensated me via a cash payment, gift, or something else of value. Regardless, I only recommend products or services I use personally and believe will be good for my readers. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255: “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”

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Lauren
Hi, I’m Lauren, and I LOVE being an expat in Sydney but am fed up with all the misinformed and useless expat guides out there, not only giving bad advice but also charging for it! So I created Sydney Moving Guide written by expats, for expats. Click here to read my story.

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