Purchasing a property in Australia, whether it be for investment purposes or as your primary residence, can be a stressful experience for most. This can be even more the case for Australian expats living and working overseas trying to arrange everything from abroad, from the lender financing to the conveyancing of the property, and even just trying to arrange inspections. Buying a property down under whilst living abroad doesn’t need to be this stressful, and that’s why we’re here to help.
This week our team at Loansuite has put together a simple checklist for Australian expats looking to purchase a property in Australia. It doesn’t matter whether it’s for investment purposes, or you’re buying the property that you’re looking to move back into, we hope you find this checklist helpful.
- Shortlist the properties that you find suitable
The first step when it comes to planning the purchase of your property is to start exploring your goals. Are you looking to purchase a property for investment purposes or to move into? Is it for capital growth or yield that you’re looking to invest? What aspects of the property are important to you? What areas are you considering? Once you’re clear on your goals and the key criteria, you can start to create a shortlist of suburbs as well as the maximum price that you’re prepared to pay.
Some of the key aspects that you may want to consider are:
- Profile of the suburb you’re looking to invest in
- Access to schools
- Local transport infrastructure
- Access to amenities such as parks, cafes, shopping centers
- Gentrification of the suburb
- Distance and access to key employment hubs
- Discover your borrowing capacity with your mortgage broker
Once you’re clear on the key criteria for your property and have an idea of the maximum amount that you’re prepared to spend on the property, it’s time to engage your mortgage broker. Your mortgage broker will not only be able to recommend the most suitable lender for you and arrange your financing but will also be able to work with you in analysing the following:
- Calculating the repayments at today’s and expected future interest rates;
- Explore how to structure your loan between variable, fixed, principal and interest, and interest-only;
- Consider whether you should have one or multiple offset accounts;
- The impact of using a redraw facility;
- How you could look to access equity in your property;
There are many considerations and scenarios to work through with your mortgage broker. Importantly, an experienced Australian expat mortgage broker will be aware of which lenders will accept your foreign income, which will apply Australian tax rates for serviceability purposes, which will accept your bonus income, which will allow your non-Australian spouse to be included on the loan and property title and which will ultimately be the most suitable for you.
- Consider engaging a buyer’s agent or property adviser
Your next step in your property journey is to consider whether you’d prefer to do your own research and due diligence in identifying a suitable property or engage an adviser or buyer’s agent. There are many options around of groups who can work to a particular mandate that you set out with them outlining the key criteria for the property that you’re looking for, including the objectives you’ve outlined in step one and the price you’ve determined you’re prepared to pay.
The fee paid to buyer’s agents or advisers can vary depending on your objectives, so it’s important to do your homework here and consider which option is going to be most suitable for you.
- Obtain your pre-approval
Once you’ve identified the property goals, and discussed how much you’d like to spend and the most suitable way to structure your financing, the next step is to work with your mortgage broker to obtain your pre-approval. A pre-approval involves a full assessment by the chosen lender of your financial situation and application to determine whether they will approve you for the amount of money that you’re asking for. A pre-approval will often remain valid for 3 months and can be extended if need be.
While we would always recommend obtaining a pre-approval when you’re looking to buy a property, this can be particularly important for those looking to buy a property at auction. In most cases, when bidding on a property at auction, they will not allow you to include the ‘finance clause’, which allows you to get out of the contract if your financing/loan application is rejected and you can’t obtain the finance. By having your pre-approval in place already, you can comfortably bid at auction knowing that you have already been through the full assessment for your financing.
- Engage a conveyancer
Your next step is to engage a solicitor or conveyancer who will be able to review the property contracts for you and take care of the legalities associated with purchasing a property. There are DIY conveyancing kits that are available, however, we would always recommend that you seek professional advice. Buying a property is not something that most people will do every day, so it’s important that you’re getting it right at the first step.
Your solicitor will be there for any concerns or questions that you have in buying the property also, so can be a very handy resource for you.
- Be clear on your objectives with your tax (financial) adviser
Whether you’re looking to buy your primary residence or investment property, it’s often a good idea to run the scenario past your financial planner and / or tax accountant to ensure that you’re getting the strategy right, and not overlooking any opportunities or creating problems for yourself in future. This could include factors such as the following:
- Interest-only or P&I repayments for your loan;
- Which loan your offset account should be tied to;
- Which property costs will be tax deductible;
- How you can direct excess rental income to your non-deductible debt;
- Which loans will be tax-deductible and which won’t;
- How to ensure that you’re claiming all allowable property costs and depreciation.
Naturally, these are just some of the key factors to explore and can mean a substantial difference in the financial outcome for you.
- Be aware of the sales process and what’s required
Once you’ve engaged your conveyancer or solicitor, be sure that you’re clear on what’s involved in the overall sales process including what costs are involved, what documents need to be witnessed and signed, and what happens from the point of your offer being accepted to taking ownership of the property. While your mortgage broker, conveyance, and buyer’s agent if you’re engaging one can take care of most of the process for you, this doesn’t mean that there won’t be documents required to be signed and actioned, and other steps for you to carry out in the process.
- Carry out professional inspections
As part of your property purchase journey, you will likely want to ensure that you carry out at a minimum building and pest inspections on the property. This should be carried out by qualified professionals to ensure that nothing is overlooked. Your solicitor or conveyancer should also carry out any other relevant checks to ensure that there are no boundary issues, and no works have been carried out without relevant approvals that would have been required.
- Engage a Notary or the Australian High Commission
As an Australian expat living and working abroad, you will likely need to engage someone who can witness your identification and your mortgage documents, which has a different set of criteria than for those living and working in Australia. Often the two key options will be to book an appointment with the Australian High Commission or a Notary Public, who can complete this process for you. Depending on where you reside, you may wish to work with your mortgage broker to ensure that the appointment is booked in advance depending on the availability of the High Commission or Notary to ensure that there are no delays in your property settlement.
It’s also important to ensure that you have the right instruction letters and documentation to take to the Australian High Commission, as they often will not sign anything unless you have these items with you. Check with your lender or mortgage broker to ensure that you have everything you require.
- Finalising the documentation
Finally, ensure that you complete the loan and property documentation as guided by your mortgage broker and conveyancer or solicitor. Many documents will be required to be physically signed and returned to the lender or titles office, so be sure that you send items back via courier or registered post so that you can track the delivery and keep the relevant parties up to date on their return. It’s also important to work with both your mortgage broker and conveyancer and ensure that everything is completed in a timely manner, and you can settle your property on time.
If you have any questions on the above or feel that you’re unclear on any steps, feel free to reach out to our team at Loansuite.
LoanSuite Pty Ltd is your lending partner for all of your home loan, investment property, business, and commercial financing needs. With our wide range of lending solutions, expertise in financial planning and investment strategies, and extensive experience in working with both Australian residents and Australian expats, we are your partners for your lending needs.
Book an obligation-free, complimentary consultation here today.
LoanSuite Pty Ltd is an Authorised Credit Representative (Credit Representative Number – 494608) of My Local Broker (Australian Credit License – 481374). Important Disclaimer: Your complete financial situation will need to be assessed before acceptance of any proposal or product.