Foreign Income Home Loans

Are you looking to purchase a property with a foreign income? Read our comprehensive guide to help you navigate the path.

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, updated on August 8th, 2023       

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For Australians or Australian residents who reside in the country but whose primary income is in foreign currency, or Australians living and working overseas, the grey areas regarding accessing a mortgage to buy property can require some clarification.

This article will provide an overview of foreign income home loans, how they differ from a standard mortgage, what to expect during your application process, and answer some common questions which may give you peace of mind.

What exactly is a foreign income home loan?

Despite having a complicated sounding name, Foreign Income Home Loans perform the same function as a regular home loan, but are designed for property-buyers whose primary source of income is in the form of a foreign currency or multiple currencies.

Because of various financial factors relating to the fluctuation in value of international currencies and additional expenses relating to their exchange, financial institutions such as banks and credit unions attach certain conditions to these loans which might not otherwise be present in the case of a regular mortgage.

What are these conditions, and should I be worried?

First off, and most importantly, there is most likely no need for you to be overly concerned with this process. As these credit arrangements have become more common over time, most large banks offer these arrangements to Australian residents or Australian citizens living overseas. For residents, banks will still lend in the area of 80-95% of the total value of the property in question. This percentage is known as the ‘loan to value ratio’ or LVR. For those living abroad who wish to buy in Australia, the acceptable LVR will likely be closer to 60%.

Some conditions that you should be aware of include:

  • You will still require a record of your foreign income accounts showing a sound financial position before you can be approved.
  • If you hold current debts in a foreign country, these may be factored into the lender’s decision to approve your loan.

As always, financial matters often contain a great deal of nuance though, and are subject to a wide variety of factors which are beyond the scope of one web article. For this reason, this article should be used as a starting point in your journey to understanding foreign income home loans, and decisions regarding your own financial affairs should be made following consultation with professionals based on your individual needs.

Not all currencies are made equal

While your stream of income may be steady and reliable, due to the volatility or relative scarcity of certain currencies, banks may be less willing to accept the risk of home loan repayments made in foreign currency.

Typically, a range of more stable, popular currencies will be viewed as a safer option for lenders.

Examples of treatment of various currencies for home loan purposes and their likely LVR.

The eight major currencies (90%) Secondary popular currencies (80%) More volatile or uncommon currencies (60%)
Australian Dollar
Hong Kong Dollar
Vietnamese Dong
US Dollar
Indian Rupee
Thai Baht
Canadian Dollar
Chinese Yuan
Fijian Dollar
NZ Dollar
Swedish Kroner
Malaysian Ringgit
Japanese Yen
Taiwan New Dollar
Saudi Riyal
South Korean Won
Norwegian Krone
Great British Pound
Philippine Peso
Emirati Dirham
Swiss Franc
Indonesian Rupiah
Kuwaiti Dinar

Other questions that arise when considering foreign income home loans

Will I be expected to pay increased interest rates or hidden fees?

No, you will be subject to same interest rates as mortgages repaid in Australia Dollars and typically your loan will not incur further fees.

What if I earn a portion of my income in Australian Dollars also?

In this case, your Australian income will be positively factored into your lending requirements. For example, if only 70% of your income is in foreign currency, your loan can be structured in a more lenient fashion and potentially allow for a higher LVR.

Can I use a guarantor in order to access a higher LVR?

Yes, in the same way a home loan in Australia Dollars can include a guarantor to provide lenders with lower risk and improve your borrowing capacity, you can use a guarantor for your foreign income loans too.

Will my current assets be eligible to be used as security for my loan?

Yes, if you own Australia property or other assets such as a business, this will be taken into account by your financial institution and may improve your loan eligibility.

What if I own overseas assets too?

Any income earned from overseas assets will be factored into your foreign income, however whether or not these assets can be used as securities for your arrangement will be determined on a case-by-case basis.

Will the process of obtaining my foreign income home loan be more difficult?

Generally, the difficulty of the mortgage approval process is determined largely by factors relating to your current financial status. While the conditions of your home loan may differ if your primary income is in a foreign country, whether you are approved or not ultimately comes down to fundamental basics, such as your total amount of funds on hand for a deposit, your credit history and the provision of proof that you receive a reliable income.

The chances are that if you feel would be likely to be approved for a regular mortgage, you can feel reasonably optimistic that your foreign income home loan can be approved also.

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