Better Mortgage Management's managing director on the forgotten borrower category of Australian and NZ expats
Better Mortgage Management's managing director, Murray Cowan, on the forgotten borrower category of Australian and NZ expats
Options for non-resident lending have greatly reduced from what was available two years ago. A forgotten but equally affected borrower category is Australian or New Zealand expats. Perhaps unfairly, a majority of lenders have lumped expats together with non-resident borrowers and this has caused some headaches for a lot of expats who are now struggling to obtain a mortgage for an investment property in their home country, that one day they will likely return to reside in.
In early 2016 the big banks announced they were pulling out of non-resident lending, due in part to concerns about potential fraudulent activity amongst foreign nationals and regulator pressure to reduce Investment lending. Most lenders stopped lending to non-residents and included expats; others reduced the LVR’s that they were prepared to lend to for expats to 60% or 70% LVR’s; others also placed additional conditions on potential borrowers such as requiring funds to be placed on deposit with that bank.
An expat borrower is any Australian or New Zealand Citizen looking to purchase or refinance a residential property in Australia who is currently living and working overseas.
There are some differences to normal residential lending such as the lender only using a percentage of the borrowers total income figures, to allow for currency changes. The borrowers usually have to provide bank statements to ensure the foreign income earnt can be verified. Some lenders have risk fees and others require Lenders Mortgage Insurance (LMI) on every deal, with the LVR determining whether the LMI would be payable by the Lender or the borrower. The amount you can borrow with an expat home loan really depends on the product and policy at the time of application. Other supporting documentation required by most lenders includes copies of your passport and visa showing that you are allowed to live and work overseas as well as supporting documentation.
Australian or New Zealand Expat lending remains an option within the mortgage market. The level of borrowing and policy restriction will be dependent on future market factors. Better Mortgage Management has various products that cater for expat customers.
Founder and managing director, Murray Cowan, has been leading Better Mortgage Management since 1999.
