When considering purchasing property in Australia, understanding the local mortgage process and requirements is crucial. D.com has invited Billy Ho, a mortgage broker with over ten years of experience, to share the top 10 things to consider when applying for a mortgage in Australia. We'll share these 10 key considerations to help you navigate the mortgage application process.
[For Overseas Residents] A Practical Guide to Australian Mortgages
Speaker: Billy, Senior Australian Mortgage Broker
Hi everyone, I'm Billy, a mortgage broker with over ten years of experience in Australia. I'm grateful to Australia National Property for inviting me to share some practical information about mortgages in Australia.
First, I'd like to answer some common questions about Australian mortgages. Many people are curious about whether they can still borrow money in Australia if they don't have Australian citizenship or run their own business in Hong Kong. If so, what's the maximum mortgage amount they can borrow?
Even if someone only holds a temporary residency visa or intends to purchase property in Australia solely for investment, they still have the opportunity to borrow money in Australia. Although most banks stopped accepting applications from overseas investors a few years ago, many financial institutions, including some fund companies, now offer mortgage services to this group of clients. These institutions generally accept loan applications from both employed and self-employed applicants. They can offer up to an 80% loan-to-value ratio, and the maximum loan amount can be approximately AUD 2 million.
As for interest rates, these financial institutions generally provide floating rate loan products, and the current interest rates are around 6.1% to 6.2%.
Next, I'd like to share with you the key points about when to contact us for a bank loan application, and whether you should start by looking for a property or applying for a loan. Generally speaking, before viewing a property, we recommend obtaining a bank pre-approval. This is similar to Hong Kong's stress test; once you know how much you can borrow, you can confidently proceed with your property search. We typically recommend obtaining a pre-approval from us three months before viewing a property. This pre-approval is valid for approximately 90 days, or about three months. Of course, if you're buying a pre-sale property, the situation is different, as it may not close for a year or two. In this case, you should wait until three months before closing to contact us for a loan.
Finally, I'd like to explain what documents you need when applying for a bank loan. First, of course, is your Hong Kong identity document. Second, we need to prepare your Hong Kong credit report, commonly known as a TU Report or Credit Report, for the bank. This part requires careful attention, as it may reveal your Hong Kong loan status. Third, you need documentation proving your income. If you work, you'll need to provide the last two to three payroll receipts and three to six months of bank statements. If you're self-employed, you'll need to provide your tax returns for the past two years.
Another common concern is the fees banks charge when applying for a loan. Generally, there are three types of fees: application fee, valuation fee, and bank legal fees. The total cost is approximately $1,500 to $2,000 Australian dollars. Additionally, banks may charge annual fees of around $400 to $500 Australian dollars.
Finally, I'd like to share a few tips to help you borrow more. First, when choosing a repayment method, try to repay the principal and interest. In Australia, you can choose to pay only the interest and not the principal, but this will reduce the amount you can borrow. Second, try to minimize your monthly expenses, as banks will see your bank statements and monthly expenses. Third, pay special attention to the credit limit of your Hong Kong credit card. During the Australian approval process, regardless of whether your credit card has been used, the bank will calculate your monthly expenses as a percentage of your credit card limit. Therefore, the larger your credit limit, the less you can borrow.
That’s all for today’s sharing, thank you for listening!
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