The State of Home Loans for Aussie Expats – Tim Raes, Aussie Expat Home Loans

Getting a mortgage for overseas property is very important, but also a maze and rapidly changing. To hear about the current state-of-play for Aussie expats looking to get a loan, Soho’s Eli McGeever sits down with Aussie Expat Home Loans’ Tim Raes.

About Aussie Expat Home Loans: Aussie Expat Home Loans was founded on a simple goal – to ensure that Australian Expats are getting the best home loan deals they can.

Borrowing as an expat has become more difficult, but we are here to provide you with expert guidance and advice to help navigate that process as easily as possible. Each bank in Australia has its own set of rules and policies for assessing applicants living offshore.
Our job is to find the bank that suits your situation, and ensure you get the best deal tailored to your needs.

The firm was founded by Tim Raes, an ex-NAB private banker in 2017. By being an expat himself, and living and working in Singapore, he is uniquely positioned to be able to meet with and understand other expats in the region and help them obtain finance from Australian banks.

EM: How has demand been for Australian property from expats in H1 2019 and what type of property are they buying?

TR: More and more expats have begun to return to searching for property in Australia in the first half of this year.
While in Australia the drop-in property prices and lower AUD have been a drag on consumer sentiment, expats have been looking at these factors and realise now is a great time to buy and enter the AU property market. Combined with the greater certainty provided by the recent election outcome, the last few months have been one of the busiest periods in recent years for expat property searches.

Most expat purchases have focussed on two areas:

  1. Expats who have a plan to return home in the next 1-3 years
  2. Long term Expats who want to add to their property portfolio

Expats who have their plan to return back to Australia have been focussing on landed homes in blue chip areas of the capital cities. Areas that are attractive to all buyers, that have good schools, transport and likely located in the City their employer will repatriate them to.

Long Term Expats who have been making investment plays have also been focussed on landed property, and we have seen areas such as Perth, Brisbane and Canberra feature heavily in their purchase selections.

EM: Is it getting easier to get an offshore mortgage for Aussie property?

TR: The market for expatriate borrowing has been tough for a number of years now. Before the royal commission was called there was already a tightening of assessment of offshore income, and then leading up the royal commission the general difficulty in borrowing continued to hurt expats as well as borrowers back home.

Moving into the second half of this year, we are more hopeful that the lending landscape will start to improve due to some of the change of rhetoric from the government and regulator, and the realisation of how these tough borrowing conditions are affecting the property market. The recent change in bank assessment rates is a positive start to hopefully seeing some normality and ‘logic’ being returned to assessment of borrowers loan applications.

For offshore borrowers, most banks continue to assess their overseas incomes by applying Australian tax rates to the income, as well as additional shadings for FX movements. This has been the biggest cause of difficulty for Expat borrowings, as many countries that expats reside in are lower tax jurisdictions compared to Australia, and the cost base (rent, living expenses etc.) are accordingly higher.

I’ve had two lenders recently advise me they are expecting to revise their assessment policy by the end of the year to consider assessing on actual tax rates instead of AU tax rates, and if so, this would be a great and well needed step in helping more Expats secure finance.

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Tim Raes
+65 8479 3873
[email protected]

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