The Process of Buying Australian Property as an Expat

There’s no doubt that when it comes to buying an investment property back home, it may seem a daunting process, being away from Australia sometimes feels overwhelming, particularly when you think you may be missing out on a booming real estate market. The purpose of this article is to help you avoid the hurdles and make the process as seamless as possible.

Australian Property continues to be an attractive investment, reaping the benefits of strong returns and a stable real estate market. In fact, the Australian property market's stability is a real stand-out, having never seen drops like other leading markets. The Australian market has never dropped by more than 20% in a year, standing head and shoulders above the likes of the United States and China which have seen drops of up to 70% in a year. Australia has an incredibly strong history of housing price growth, envied by many countries, and with the continuous steady undersupply of housing in capital cities as the population grows, it presents an excellent investment opportunity for investors. 

When it comes to deciding on a location, it very much revolves around what you want from your investment. Are you looking for somewhere to take advantage of the continuous capital growth or is a yield more important to you? Whichever answer may fit your investment plan, research and due diligence are important parts of the process. Key factors to consider when deciding on a location, include population growth projections, major infrastructure projects, employment opportunities, and current housing supply, which will result in an influx of demand and posing as a high growth investment. 

When it comes to considering your finance options, the biggest question here is can you, as an expat, secure a mortgage in Australia? The short answer is yes! The process is somewhat similar to borrowing as if you were in Australia, with similar rules in place to borrowing in your own backyard. The only exception being, as an expat, you will be classed as a non-standard borrower by a lender, and as a result, the lending criteria will be unlike that of someone living in Australia. You may be required to provide a larger deposit and slightly higher Lenders Mortgage Insurance (LMI) when borrowing above 80% of the value of the property. Also note, if you are self-employed, lending could be restricted to 70% of the value of the property. As an expat, unlike a foreign investor, you are not required to apply for Foreign Investment Review Board (FIRB). It is highly advisable and our recommendation that you contact a mortgage broker, who will help you understand the criteria for borrowing and guide you through the process of applying for a mortgage whilst being based overseas. 

The Buying Process:

  1. Budget and Plan - Ensure you research, plan, and budget

  2. Organise a team of professionals:

    1. Conveyancer/Solicitor - To undertake all legal work, ensure your appointed solicitor has the required license to operate in your desired state of investment.

    2. Mortgage Broker - Recommend finding a broker who specialises in assisting expats buying property in Australia.

    3. Accountant - We highly recommend appointing an accountant or tax specialist, they will be able to help with the structure of your finances and save you money on tax.

  3. Get Pre-Approved - As the famous saying goes, ‘good properties don’t stay on the market long!’ So acting quickly and being able to pull the trigger is key.

  4. Begin your property hunt - it's time to find the right investment for you. 

  5. Obtain formal mortgage approval - Once you’ve identified a property to buy, it’s time to forward the contract to your mortgage broker to proceed with the formal approval. Don’t commit to a property until you have your mortgage formally approved.

  6. Exchange contract and pay your deposit

  7. Final Arrangements - Now you have possession of your loan contract, ensure you go over it with your mortgage broker or solicitor. As an expat, you will be required to visit the Australian embassy or consulate in the country of residence in order to be identified and have your loan documents witnessed. 

  8. Settlement - Property changes hands, generally handled by conveyancer or solicitor in conjunction with your bank and mortgage broker. Upon settlement, the property manager you have allocated to marketing your property can begin approaching prospective tenants. 

Whilst from afar, it may seem a daunting process, buying remotely as an expat, it is not. Through thorough due diligence in selecting the ideal location for your investment needs and the right team of advisors around you, the process can be extremely straightforward, painless, and financially very rewarding. 

If you have any questions or would like to discuss how to get on the property ladder or grow your property portfolio, please do not hesitate to get in touch with me.