As a foreign citizen looking to invest in Australian real estate, there are some obstacles that you will be required to overcome. In addition to the standard loan application process, you will require approval from a branch of the Australian government known as the Foreign Investment Review Board, or FIRB.
When is FIRB Approval Necessary?
If you are purchasing a foreign investment mortgage, you will almost inevitably need approval. Citizens and permanent residents are usually exempt, as well as citizens from New Zealand. A temporary resident who has been living in Australia for longer than a year may not need approval either. However if you a foreigner living outside of the country, FIRB approval is a must.
It Is Not Difficult to Obtain Approval!
In most cases approval is not difficult. Foreign citizens hoping to buy a home to live in, without any kind of visa, will have trouble gaining approval, but most real estate investors will have no trouble obtaining a home loan overseas, as long as they are buying in Australian dollars. For foreign currency mortgages finding a willing bank or lender is far more difficult, and possibly more expensive.
Generally speaking, if you do not plan to live in the home, it is much easier to purchase a mortgage. You can also see our Non-Resident Mortgage Calculator to see if you may be eligible for an Australian mortgage.
Do you already have your FIRB approval and a property in mind? Our mortgage brokers are approval experts in foreign investor mortgages, so contact us and apply today! You can either enquire online or call us on +61 2 8668 4038.
Are There Any Restrictions For Foreign Investors?
The odds are not in your favour when buying used property as an investment in Australia. In most cases, as a foreign investor you will only have the opportunity to buy an investment mortgage if it is for new property or real estate.
You should not however have any trouble applying for a loan to buy vacant land for investment purposes. In order to earn approval, you will typically need to agree that construction will begin on the site within a 24 month period. If you cannot begin construction within that period of time, you will generally be required to wait until you have the resources to do so.
Pre-Approval Is Best For FIRB
If you are fairly sure that you want to buy investment property in Australia, but haven’t yet found the property that you are looking for, it is unlikely you will get FIRB approval. Approval is specific to the real estate you purchase so they cannot give general approval.
You can however apply for pre-approval for your foreign investor mortgage. This is important because you may find a property you like without warning and without pre-approval it is very risky to bid or make an offer.
Why? You may be declined, or only loaned a partial value of the property, but you are still liable for the entire value of the property. This may cause you to owe far more money than you can afford, leading to financial hardship.
Basically pre-approval means that if you find a property you want you are far more likely to be able to make an offer or bid because you already know that you can borrow the money.
The Purpose of FIRB Approval
The need for approval from the Australian government should not be a cause for concern. Nearly all applications are granted approval. The purpose of the review is to ensure that all investment will benefit Australia.
The focus is on ensuring that investment will create new property, rather than scavenge old property. It is also to prevent speculation, so that land is only purchased if it will be developed.
What Other Restrictions Should I Be Aware Of?
Second Hand Real Estate – Any property that has been previously lived in or occupied for more than twelve months is considered second hand. If you are a foreign individual, you do not have the right to purchase second hand real estate for investment purposes. It cannot be transformed into a rental or holiday property.
Foreign companies have more rights however. They may purchase second hand property and use it to house their employees. In most cases, the company would need to agree to sell or rent the property if it is vacant for over six months.
Vacant Land – To purchase empty land, you are required as an investor to begin construction within the first 24 months. You may buy more land than is necessary for a single residence.
If you do you are also required to spend half the cost of the land on developing the property. As long as you meet these conditions, you can rent out the property, use it personally, or sell it.
New Real Estate – In most cases, the only requirements are that the property is bought directly from the developer, or that it hasn’t been lived in for over twelve months. As an investor, you are prohibited from marketing the property exclusively to foreign citizens.
Redevelopment – If you plan on purchasing established property with the intent of demolishing it and building new property, you are more likely to receive approval. In doing so, you will need to build more dwellings than previously existed. You cannot rent out any of the second hand property before it is demolished. Beyond that, it is treated much like vacant land. You need to demolish the old property, and begin new construction within 24 months.
Help Is At Hand!
Don’t feel overwhelmed by all the information. Mortgage Broker Australia helps many foreign investors buy real estate and property in Australia. You can use our home loan forum to find out more, or visit the rest of our website by using the menu on the right.
You can also see our section on How To Buy Real Estate including information on the property buying process.
Apply for a Foreign Investor Mortgage
Our brokers here at Mortgage Broker Australia, specialise in banks who lend to foreign investors looking for Australian real estate. Please enquire online or call us on +61 2 8668 4038 and one of our mortgage brokers will contact you to discuss your finance options.
