For many of our clients, earning foreign income can be the single most important factor stopping them from achieving their dreams. Whether that be buying your first home or growing an investment portfolio in Australia, obtaining a mortgage can be challenging when your financial circumstances deviate from the norm.
Coming from diverse backgrounds, walks of life or being part of the global economy should not stand between you and building a bright financial future! With our comprehensive guide, you’ll be able to understand the essential considerations and requirements you must keep in mind to make your dream of owning a property in Australia a reality.
Let’s get started!
Foreign Income and Loan Eligibility
Since the advent of COVID-19, remote work has become the new norm. Many Australians and permanent residents now work for overseas companies, which has created a new and unique category of borrowers: those earning a foreign income.
At Rise High Financial Solutions, we’re here to help you understand how you can secure a loan under these circumstances.
To make it simple, let’s start by gaining some clarity on the main types of borrowers who fall under this category:
Types of Borrowers
- Australian Citizens and Permanent Residents Working Overseas: These individuals live abroad and also earn their income from foreign companies. They have permanent residency and citizenship in Australia but currently reside overseas.
- Australians Working for Foreign Companies: This category includes Australian citizens or residents who live in Australia, but are currently working remotely for international businesses.
- Non-Residents with Foreign Income: Whether they live abroad and earn foreign income, or are temporarily living in Australia whilst working for a foreign company. This category includes anyone who is not an Australian citizen or resident and is looking to buy a property in Australia.
Key Considerations for Borrowers Earning Foreign Income
Now that we’ve got clarity on some of the scenarios that could represent borrowers with foreign income, what exactly are banks looking for when assessing your application, and what should you keep in mind to assess your eligibility when applying for a loan with foreign income?
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Citizenship and Residency Status
Let’s begin by tackling one of the main concerns our clients share with us when seeking to get approved. Are there opportunities for non-residents? Do residents get opportunities as well?
Though most lenders favour Australian citizens and permanent residents, non-residents can still secure loans by choosing the right bank.
Some lenders have eligible offers for non-residents, and lender selection will often impact key aspects of your application like terms and borrowing capacity. Working with your dedicated Rise High broker will help you simplify the process, guiding you in the right direction to make the right choice to support your financial future.
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Types of Currency
Did you know the type of currency you earn can significantly impact your loan application? With citizenship and residency status out of the way, currency becomes a main factor to consider.
Stable and widely circulated currencies like USD, Euros, and GBP tend to be preferred by banks.
However, since each bank has different policies regarding accepted currencies, it is vital to work with one of our experts so you can easily identify which banks have eligible loan products for you.
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Type of company
When it comes to the type of company you work for, banks prefer applicants working for large multinational or publicly listed companies, as they provide a level of stability and credibility that small overseas businesses may not be able to.
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Being Self-Employed
Similarly, for our self-employed clients, banks tend to prefer the ability to confirm stability and credibility from their borrowers, which typically means that only a select few lenders will offer loan products to self-employed clients earning foreign incomes.
When applying for those who do, you’ll require detailed financial records translated into English that meet Australian accounting standards.
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Your Net Asset Position
For Australian banks, lending to foreign-income borrowers is perceived to be more risky.
Due to this, showing a robust financial profile that includes assets like genuine savings, superannuation and properties can be really helpful in helping you reduce the perceived risks a lender associates with approving a loan for you as a foreign income borrower.
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Income Shading, Discount rates and your Borrowing Capacity
Finally, you’ll also want to understand how foreign income shading works.
When assessing your application, lenders will often “shade” your income by converting it to Australian dollars and applying a 50/80& margin to account for potential risks.
As a result, your borrowing capacity (how much you can actually borrow) can be a lot lower based on the discount rate your chosen lender applies.
Working with a group of trusted professionals who have dealt with lenders in the past can help you understand how lenders are likely to act when assessing applications. Making the most out of our expert advice can significantly increase your chances of obtaining a successful outcome!
Additional Requirements
Besides taking into account the previous considerations, banks will also want to see three main formal documents and reports:
- Employment Contracts: As a foreign income earner, banks will want to have access to your formal employment contract to understand the solidity of your position and assess the risk involved in approving your application
- Salary Credits: Regular income credits will also help lenders assess the application, basing it on your historical financial habits
- Foreign Credit Reports: Some lenders may also request a credit report from your home country to ensure there are no undisclosed liabilities. Your credit report will also provide a snapshot of your credit score, which may impact how much you can borrow.
Real-Life Scenarios and Success Stories
Though the considerations and requirements above may sound like a lot to consider, we’re happy to share that many of our clients have already achieved their financial goals working together with the support of our wonderful experts,
One of our clients, a self-employed pharmacist in Malaysia, successfully secured a low-doc foreign income loan to invest in Australian property!
Despite not having recent financial records, being self-employed and earning foreign income, we managed to get approval by demonstrating their long-term business stability and providing the bank with enough proof to support the reliability and trustworthiness of their application.
Since navigating the intricacies of foreign income loans requires the consideration of additional challenges and can be greatly supported with the guidance of the right experts, at Rise High, we have specialists that can work with you in this niche area, offering tailored solutions to maximise your chances to obtain a successful outcome.
Working with our extensive panel of over 70 lenders, we can support you in finding the right loan product to suit your unique financial circumstances.
Ready to Take the Next Step?
If you’re earning a foreign income and looking to buy property in Australia, get in touch today!
Our team of experts is here to guide you through the process, ensuring you achieve your financial goals with confidence.
