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Home loan options for temporary residents of Australia
If you're on a temporary visa in Australia, you can qualify for a home loan. But there are more hoops to jump through.
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Temporary residents of Australia who have been issued a visa may be able to qualify for a home loan in Australia. You will need to provide proof that you have a steady source of income and in most cases will need to get special permission from the Foreign Investment Review Board (FIRB).
If those qualifications are met, you will be able to apply for and receive a home loan worth up to 80% of the value of the property. Unfortunately as a temporary resident, you will not be eligible for a First Home Owner’s Grant (FHOG) unless you are purchasing the property jointly with your Australian citizen or permanent resident spouse.
One way to find out what loans may be available to you if you're a temporary resident is through a mortgage broker.
What home loans are available to temporary residents in Australia?
The home loan options being offered to temporary Australian residents are typical mortgage packages that would be available to Australian citizens or permanent residents. The main difference being the cap on the amount you are allowed to borrow and the down payment that is required. Depending on your job circumstances you may be able to qualify for up to 90% of the value of the property. The loan types on offer include:
- Basic home loan. This features a lower variable interest rate and your choice of 30 year terms or 15 year interest-only payments.
- Standard variable rate home loan. Features a competitive variable interest rate for your loan and the ability to request to redraw funds from your extra payments.
- Fixed rate home loan. Allows you to choose terms of one to five years at an interest rate that will not change over the course of the loan.
You can lock in at a low advertised rate and have three months before it can rise. The wide array of options that are available to temporary residents of Australia allows for you to choose the terms that will work best for your budget.
Pros and cons of a temporary resident home loan
- Same terms. You are offered the same terms and interest rates as Australian citizens and permanent residents. There are no penalties for your temporary resident status such as higher monthly payments on your loan.
- All features are available. There are features available including offset accounts and the option to delay your mortgage payments under certain circumstances.
- You must receive approval. You will need to obtain approval from the Australian Foreign Investment Review Board before qualifying for a temporary resident home loan
- No first home owner grant. You can’t access the FHOG unless your spouse or partner is an Australian citizen or permanent resident
How to improve your chances of getting a home loan as a temporary resident
- Have evidence of income: When preparing to apply for a temporary resident home loan, gather as much information pertaining to your employment as possible. Providing proof that you have been employed with the same company for over two years could allow you to borrow up to 10% more of the property's value.
- Show proof of savings: You will generally need to save a 20% home loan deposit, to get a home loan with a loan to value ratio (LVR) of 80%. The greater the deposit you save, the better your chance of gaining approval.
- Be prepared for extra costs: In addition to preparing your employment history, have funds set aside for extra costs when you purchase the house. Keep in mind, you don't have access to grants and incentives like waiving of stamp duty for first home buyers, if you are a temporary resident.
FAQ about getting a home loan as a temporary resident
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