Foreign Citizens living in Australia often have difficulty with arranging a home loan for their proposed property purchase. This article details the eligibility requirements for a temporary residents to get a home loan (in particular the requirement for deposit) and also answers some common questions about purchasing a property in Australia without holding citizenship.
What is a Temporary Resident? A temporary resident is someone that resides in Australia and holds a temporary resident visa that permits the holder to work and remain in Australia for a given period of time. The most common visa is a 457 working visa which permits the holder to remain in Australia for a 4 year period Ki Residences.
Compare this to a permanent resident whose visa will state that the holder is permitted to remain in Australia indefinitely. Permanent residents are treated like Australian Citizens by the banks and lending institutions providing they are living in Australia.
Can Temporary Residents get a Home Loan/Mortgage? Temporary Residents can still obtain a home loan. The eligibility criteria for approval is more strict than for those that are Australian Citizens or permanent residents. Nevertheless, a home loan whilst on a temporary resident visa is possible.
What is the Eligibility Criteria? The main difference for temporary residents is that unlike their Australian counter parts, foreign citizens on a temporary visa will generally require a 20% deposit plus purchasing costs like stamp duty etc. The reason for this is that the lenders mortgage insurers will not insure a loan greater than 80% LVR for someone that does not hold citizenship or permanent resident status. The lenders mortgage insurer is concerned about the visa not being extended and the applicant needing to leave the country and therefore sell the property at short notice.
There is an exception to this if the foreign national is buying with an applicant that is an Australian citizen or permanent resident. If purchasing a property jointly with an Australian citizen or permanent resident then some lenders will consider this application under normal guidelines and sometimes only a 5% deposit will be required.