Before reading on
Don’t change anything based on this article.
Don’t change jobs, countries or ask for your boss to change how you are paid.
Speak to a licensed professional for personalised advice if you want a home loan.
Buying Aussie property as an expat
Australian expats work hard, and holiday gloriously. But could buying property in Australia add to the expat experience?
Living the expat life can mean good times on a grand scale. Oh, there is the work too – no escaping that. I have been on that side of the fence – I share my journey from expat to finance guy here.
The Australian government estimates about one million Australians are living and working abroad at any one time. And, with the amount of Australians setting off for overseas adventures climbing back to pre-pandemic levels, many professional expats could find themselves with an opportunity to get onto the property ladder—and keep doing their expat thing.
Can you have fun and be a little bit sensible at the same time?
Many Aussies living and working abroad like the idea of owning a little piece of Australia. But what are their chances of being approved for a home loan when you live abroad and are paid in foreign currency?
Different home loan scenarios carry different risk levels, and earning a foreign income in a non-AUD currency introduces an extra layer of risk for Australian lenders to consider.
We researched the foreign income policies of Australia’s major banks3 regarding their positions on Australian expats everywhere. As well currency analysis, we also got into the weeds on bank lending policies for expats mortgages.
The result?
We discovered 38 foreign currencies typically preferred by major Australian banks for expat home loan applications.
We then ranked them into tiers, starting with these seven standout currencies:
- British Pounds
- Euro
- Hong Kong Dollars
- New Zealand Dollars
- Singapore Dollars
- United States of America Dollars
- Canadian Dollars
Ranking just below, but still considered strong support for expat home loan applications, are these currencies:
- Chinese Yuan Renminbi
- Indian Rupee
- Indonesian Rupiah
- Japanese Yen
- Swiss Franc
- United Arab Emirates Dirham
- Vietnamese Dong
If you are an Australian expat, working abroad and earning one of these currencies, lenders are ready to talk expat home loans.
**Aussie expats can use a licensed mortgage broker for valuable insights into Australian lending.**
In addition to those already listed above, we found plenty of other currencies detailed below.
Non-resident lending activity
From our vantage point, expat lending looks to be alive and well.
Our review of major bank lending policies for foreign currency incomes demonstrated strong lender appetite for Australians or permanent residents residing overseas. As far as lending to non-citizens who reside overseas, we found this the exception – not the norm.
In the year to June 2023, the Australian Prudential Regulation Authority (APRA) reported new lending to non-residents at $1.7 billion4. While APRA’s figures show volumes were down 32% down compared to FY22, it is hard to read too much into this trend-wise given many expats returned home during the pandemic.
So, for Aussie expats who, at the same time as living their best life, want to buy property in Australia, see where your currency ranks….
Ranking factors for foreign currency
Our approach to determining which currencies are most preferred by major Australian banks involved a thorough review of lending policies for non-residents.
In ranking each currency, we applied four main tests.
Foreign currency rankings
Our review of major bank lending policies established three tiers of currency preference. In true expat fashion we have borrowed from the world of travel in defining our tiers.
First Class Currencies
To enjoy First Class status, a currency needed to have the following features:
- Access to home loans with a loan to value ratio over 80% LVR with at least one major bank.
While paying lenders mortgage insurance is a likely extra cost for these borrowers, it also means buying with a smaller deposit becomes an option. - No extra shading of foreign currency income compared to other currencies.
- Documented as an acceptable currency within lender policies with at least three of the lenders reviewed.
Business Class Currencies
To be included in our Business Class tier, a currency needed to have the following features:
- Lenders are less likely to offer LVR’s over 80%. Home loans are generally capped at a 70% or 80% LVR.
- Documented by at least two out of the five lenders reviewed.
Premium Economy Currencies
Our Premium Economy class includes some lesser known currencies:
- These currencies are less documented in lender policies than currencies of a higher tier.
- Where currencies have been documented as acceptable to the lender, the maximum LVR is 70%. So, a larger deposit is likely to be required compared to other currency tiers.
- Some lenders can consider these currencies up to an 80% LVR but this would be on a case by case basis.
Know an expat? Let them know where their currency ranks.
Considerations for expat mortgages
The currency of an Australian expat’s income will not solely determine home loan eligibility. If you are an Aussie living and working abroad, our research revealed lenders also consider the following in determining loan eligibility for expats.
Income source
- Foreign currency income preferred to be earned as an employee under an employment contract.
- Employed by a recognisable employer.
- Self employed, while less preferred, can be considered.
Application assessment
- Due to the higher risk associated with expat mortgages, a conservative approach is to assessment of the application is usually adopted.
- Unlikely to adopt foreign tax concessions.
- Translation may be needed.
Loan details
- Home loan policies are design for expats mainly looking to buy property in Australia. There are fewer options among major lenders for refinancing or accessing equity.
- Australian property acts as the security for the purchase – not overseas property.
- Home loans are in Australian dollars, based on our research.
Borrower
- We considered this research based on Australian expats living and working abroad.
- If an Australian was to borrow with someone else who is not Australian, lenders often take a conservative view and might limit borrowing scope, or not lend at all.
Advice
- We recommend you seek advice. Understand any currency, tax and financial planning implications now and into the future – in Australia and the country you reside in.
FAQs from Aussie expats
Are there limits on loan feature if I borrow from overseas?
Generally, home loan features and discounts remain widely available for Australians borrowing from abroad. Features such as offset and redraw, that enable borrowers to reduce home loan interest, are still accessible.
Does the country and currency need to align?
Lenders can look to understand why the employer and country of residency do not match. It does not necessarily represent an obstacle to getting a home loan in Australia for an Australian citizen. In my experience as a mortgage broker, I have seen this quite a lot, especially in the mining industry.
My currency is not on your list. Can I still get a home loan?
Lending is risky and banks need to control it. Even if your currency is not on our list, you can still explore your options with a mortgage broker. Banks are particularly willing to engage existing customers, even though they may not perfectly fit their lending policy.
Are there other lenders beside the major banks?
There are many other specialist lenders dealing with foreign currency – this review pertains to the bigger Australian banks. A licensed mortgage broker can review the market beyond the big banks for you.
How often do lenders change foreign income currency policies?
Lenders regularly revisit policies around foreign income and the specific currencies they can accept for a home loan application. The reasons are many but here are a few reasons for changing currency preferences:
- Lender business strategy
- Local economic conditions
- Lender specific exposure
- Government sanctions
- Political instability
- Global economic conditions
Final word
This foreign currency research and rankings for Australian home loans have been presented to enlighten and help you along your buying journey.
Don’t rule yourself out based on our currency rankings. Existing customers who want to buy a property in Australia are often considered for an expat mortgage—even if outside a typical lender scope.
You could even consider a preapproval as a way of positioning yourself for a purchase.
Understanding foreign income takes expertise and effort. Mortgage brokers have both. We can connect you with an Australian-based mortgage broker to look at your home loan options.
Like all things banking, there will be hurdles between now and a home loan approval. Making sure your income is eligible at your lender is a big one. We recommend you contact a licensed mortgage broker in Australia in the initial stages of your home buying journey.
Notes regarding research and rankings:
Our October 2023 foreign currency income lending policy review covered:
Major banks as defined by APRA (ANZ, CBA, NAB, Westpac).
We also included Macquarie given this is considered part of the big five based on market capitalisation and successful foray into the residential mortgage business. We felt a review of five lenders as opposed to four offered more insight
There are other banks and non-banks that offer home loans to expats – we did not review all lenders.
