Australian Mortgages

The Australian Mortgatge System

Now, the Australians don’t really call them mortgages, but call them more often as Home Loans.  In essence the systems are much the same.  Single people can borrow up to 3 times their annual salary, whilst couples can borrow up to 4.5 times their combined annual salary and most banks will bend these limits if they feel happy that you can support the repayments.  However, there are catches and potential brick walls that will limit the borrowing potential for your Australian Mortgage!!!

  • You can only purchase a property in Australia if you are an Australian or a resident.  If your visa does not say words like allowed to stay in Australia indefinitely, then you are more than likely NOT allowed to purchase a house.
  • You can’t simply pop to the bank on your first day in Australia and borrow a few hundred thousand dollars…unfortunately!
  • You will need to have a job offer at the least before you can even start to talk about a home loan
  • If you have already started a job and you are on probation this will limit your options.  This is a common problem, but a quiet chat to your new employer and a letter from them explaining that you are no longer on probation is all that the bank would need to be satisfied that you are in full employment
  • If you are here to be self employed in your new business, you will be severely limited.  Banks will usually require you to have an ABN for at least 2 years along with the associated accounting.  If you don’t have this you can get a low-doc home loan, but there are restrictions such as the ability to only borrow 60% of the property value and a poorer interest rate

Another thing that may take you back a few years, is that banks in Australia charge you for using their services.  As such a home loan will cost you each month to have, but it is usually quite a low cost at around $10.  However, a lot of the banks offer packages with the loan that result in the account fee being waived

There are many banks out there offering home loans so the one thing that you do have is choice.

Budgeting

This is a new country to you and you WILL need to go through your budget with a fine tooth comb to make sure that you have enough money to buy the property.  The bank will help you in this regard, but it is an essential part of the process.  Make sure you understand all of the fees involved and when things need to be paid by.  Your conveyancer will detail all of their charges, but will not list other things such as what rates and water you will have to pay upfront.  Water and rates are paid periodically and so you have to reimburse the seller for what they have already paid

Offset Mortgages

The idea of offsetting your mortgage against your current and/or savings accounts originated from Australia.  If you end up have a surplus amount of cash at the end of each month then this could be a good option for you to pay off your mortgage early.

First Home Owner Grant

If you hold a permanent residency visa and this is your firs home purchase in Australia, you will be eligible for a grant to help offset the cost of buying a home.  The amount and conditions of the grant will vary from state to state, but for example in Queensland the grant is $15,000.

The Queensland Government have a section on their website, that is full of information on the grant and the process of obtaining the grant.  Usually what you need to do is instruct the bank that you are getting your mortgage through, and they will handle the rest for you.  If in doubt, ask!  The grant is usually handled for you by the bank that you are getting the mortgage with and is applied to your account at the end of the buying process automatically.