An Australian dollar mortgage is simply a home loan that is lent out in Australian dollars. If you were a citizen or permanent resident of Australia, this would probably be the only type of loan you would even think about borrowing. If you are a foreign citizen, however, the situation can get somewhat more complicated.
What are the Advantages Over a Foreign Currency Mortgage?
Ultimately, there are fewer restrictions and risks if you purchase an Australian dollar mortgage rather than a foreign currency mortgage. Here are some of the reasons why.
Protection from interest rate changes through exchange rate fluctuation
If you are in Australia on a 457 visa, and earning an income in Australian dollars, it is fairly self explanatory that you would prefer to borrow a loan in Australian dollars. The home that you are buying is in an Australian market, and your income comes from an Australian source.
If you are visiting Australia on a visa you might like to visit our page on Temporary Resident Mortgages.
If you are in the country on another temporary visa, or if you are a foreign investor, it might not necessarily be quite as obvious. The house or real estate is an Australian property, but your income comes from a different country. Should you work with an Australian lender or a lender from your home country?
Risks of a Foreign Currency Mortgage
The primary risk is the fact that the exchange rates are in a state of constant flux as a result of the whims of the foreign exchange market. If the value of the Australian dollar were to drop, it could mean that the value of the home would drop as well.=
This would affect the Loan to Value Ratio (LVR) of the loan, and the lender might ask you to add more money to your deposit in order to keep the LVR in their acceptable range. You can use our LVR calculator to determine what your LVR could be.
As a foreign citizen, if you instead take out an Australian dollar mortgage, your risks are much lower. This isn’t to say that you are immune to the effects of the exchange rate.
If the value of the currency for your income were to drop relative to the Australian dollar, it would mean that you would have to make relatively larger payments. This is a far cry from having to make an extra down payment on your home, however.
Many more lenders
There is also the simple fact that there are more lenders who will be willing to work with you. Many lenders are unwilling to invest their funds in a security based in another currency for the reasons discussed above.
Yes, some Australian lenders will also be concerned about lending to borrowers who earn an income outside of Australia, but in general lenders are far more willing to deal with a foreign income than a foreign security. You will likely be limited to 80% LVR loans, but this is generally best practice to begin with.
More lenders means more options, which ultimately means better deals, as long as you are willing to take the time to find them. Mortgage Broker Australia works with and knows the policies of over 40 different lenders.
Read on and then enquire online for professional help today.
Where to Learn More
You can browse through all of Mortgage Broker Australia for more information. Our website is geared towards helping foreigners such as non-residents purchase property in Australia. The best way to read our material is to start from the Mortgage Broker Australia Homepage.
From there you can access the main sections of our website. These are;
- Mortgages in Australia
- How to buy real estate in Australia
- Home Loan Calculators
The calculator sections can be very useful as your results can be used as a guide to your financial status and your chances of getting your application approved.
One of our most useful calculators is our Non Resident Mortgage Calculator: This can instantly work out if you may be eligible for an Australian mortgage. You can also find links to our other calculators on that page in menu on the right.
Contacting a Mortgage Broker
As a foreign citizen attempting to buy Australian property, you are strongly advised to get in touch with a mortgage broker. If you are ready to apply for a loan, they are the best way to maximise you chances of approval, and of getting a great deal.
Brokers have first hand experience dealing with lenders, and have quick access to information that is not readily available to you. The biggest benefit is the fact that you will only be required to provide your information once, and the broker can then shop around.
Brokers have contacts who are deeply entrenched in the lending industry. In some cases, they even have exclusive deals that you cannot get without a broker. There are even some brokers who specialize specifically in working with foreign citizens or investors.
In most cases, they will be able to work with you for free. They earn their income from the lenders, but they do not work for them, they work for you. Their primary incentive is to build a good name for themselves by offering the best possible deal to their clients.
With their extensive knowledge of the industry, a broker will be able to advise you on the best course of action. In most cases, an Australian dollar mortgage will be the best option, but many brokers will be willing to help you find a foreign currency mortgage if it suits your purposes better.
Talk to a Mortgage Broker and Apply for a Loan Today!
To work with brokers that specialise in Australian Dollar Mortgages enquire online with Mortgage Broker Australia. They work with many types of foreign investment in Australian real estate and property and can find the lender with competitive interest rates that will approve your application first time.
