Will 457 visa changes make it harder to get a personal loan?
Lending rules are expected to change.
As of 18 April 2017, the 457 temporary work visa is being phased out in Australia. With a 457 visa being one of the few ways temporary residents can get personal loans and other services, this change might have significant implications.
This guide explains how 457 visa changes are impacting personal loans and the different requirements to get a loan if you’re in Australia temporarily.
What is the 457 visa and how is it changing?
The 457 visa lets visitors work in Australia and also includes options for transitioning to permanent residency. In 2018 it will be phased out entirely, to be replaced with two new visa types:
- TSS: The temporary skills shortage (TSS) visa lasts for up to two years and can be renewed in Australia only once.
- MLTSSL: The medium and long term strategic skills list (MLTSSL) visa lasts for up to 4 years and can be renewed in Australia multiple times.
However, until these are introduced, you can still get personal loans with a 457 visa. Application procedures and requirements do vary and not all providers will offer personal loans to 457 visa holders. In many cases it will also be harder to get a loan with a 457 visa than it is as an Australian permanent resident.
Can I get a personal loan with a 457 visa?
Banks each have their own requirements when it comes to allowing temporary residents to apply for personal loans. Bankwest, for example, will only offer personal loans to Australian permanent residents, while other banks will also offer them to temporary residents, including those holding 457 visas.
Others banks such as Westpac only offer personal loans to 457 visa holders with a sponsored long-stay visa.
Other conditions may also apply, such as:
- You cannot apply online. All banks that accept 457 visa holders may let you take out a loan by going into a branch, while some will also let you do it over the phone. Many will not let you do it online.
- Loan term restrictions. Your loan terms might be dependent on how long your visa is. For example, if you have 1 year remaining on your visa then your maximum loan term might be 6 months.
- Must be an existing customer. Some banks might only offer personal loans to 457 visa holders if they also have a bank account with the same institution.
- Deposit requirements. Temporary residents may be required to be depositing their salary into a specified account with the financial institution in order to take out a loan.
- Passport, visa and work history. You will generally need to provide additional documentation to confirm your legal right to stay and work in Australia.
What other eligibility criteria do I have to meet?
In addition to the eligibility requirements which can apply specifically to 457 visa holders, any personal loan application will have other conditions. This is because lenders need to establish that a borrower should be able to pay the loan back, and can use it responsibly. As such, applications might also include looking at your income, financial situation, criminal record checks and your credit score.
Generally you must:
- Be over the age of 18
- Have an address in Australia
- Be able to provide proof of age, address and identification
- Be intending on staying in Australia for at least the duration of the loan term
- Be earning a consistent income which will let you pay back the loan
Requirements can vary depending on the type of loan you’re applying for. For example, a secured loan will need appropriate collateral while an unsecured loan won’t, but the unsecured loan might have stricter income requirements than the secured loan.
How will the 457 visa changes affect temporary residents applying for personal loans?
If you are a current 457 visa holder, then any existing personal loans you have taken out will generally not be affected as your visa will continue until expiry.
Once the new visas are introduced in 2018, banks and lenders will update their products and eligibility requirements in line with the changes as needed. Some of the changes you might expect could be stricter requirements for TSS (short term) visa applicants than MLTSSL (medium to long term) visa applicants, as well as shorter possible loan terms.
If you’re currently looking for a personal loan on a 457 visa, or already have one, then your finance terms and conditions will generally remain unaffected and you can compare loans as normal, remaining mindful of any special conditions that banks may impose on 457 visa holders.