Australian law allows foreign citizens who have a valid work visa and are living in the country to own a home. In fact, the law is quite friendly concerning this kind of mortgage, and most of the usual fears that are associated with this topic are not actual issues in Australia.
The most common type of home loans for foreign citizens are 457 visa home loans. Subclass 457 is the standard business card sponsorship or business sponsorship, and it allows for a long stay period. However, the government doesn’t limit home ownership based on visa type. Other visa options include investor retirement (405), foreign government agency (415), medical practitioner (422), domestic workers (426) and diplomat (995).
Australia does require foreign citizens to get Foreign Investment Review Board (FIRB) approval. An exception to this rule for non resident mortgages is if the foreign citizen is legally married to an Australian citizen. The good news is that the government approves the vast majority of all FIRB applications.
New vs. Old Homes
Anyone who has received approval for non resident mortgages by FIRB can opt for either a new or preexisting home. If an old home is purchased, however, the law requires the owner to sell should their visa expire and not be renewed. With a new home, the person would be required to leave the country but could still possess the home as an investment.
Although the government doesn’t restrict non resident mortgages based on visa type, the financial community may in effect do so. A reason why 457 visa home loans are the most common is because banks generally want a guarantee that the foreign citizen can legally live in the country for three years. Once that hurdle is cleared, a borrower must have assets from verifiable sources and an established credit history.
Typically, Australian banks will only agree to a loan amount of 80 percent or less of the property value. In other words, the buyer must be able to show proof of 20 percent of the value in liquid or physical assets. That doesn’t mean that 20-percent down payments are required for 457 visa home loans, however. Foreign citizens can reduce the down payment to as little as 10 percent if they are able to demonstrate the other 10 percent in assets.
Foreign citizens often fear that they will be required to pay higher interest rates, but this isn’t the case, and there are actually Australian laws in place to prevent this type of gouging. A foreign citizen must be FIRB approved and then loan approved, but after that point, the financial institution will determine the interest rate and other details just as they would for a natural citizen.