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Sydney’s Investment Property Mortgages: A Guide To Profit – Want to join the long list of overseas buyers looking for a slice of the Australian dream? You may be wondering if you can buy property in Australia as a foreign buyer.
You usually need to be a permanent resident or citizen to buy a property in Australia, and if you want to finance it with a home loan, most home loans available will also need to meet the same criteria. However, foreigners can still buy it. However, the property must be a new dwelling, vacant land or an off-plan property and this requires government approval.
Sydney’s Investment Property Mortgages: A Guide To Profit
You must first apply to the Foreign Investment Review Board (FIRB), which reviews non-Australian citizens who want to buy or invest in Australian property as a foreigner.
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If you have been approved for an investment property, there are a few things to keep in mind.
If you buy an existing house, you must live in it, and if you no longer live in it, you must sell it.
The FIRB charges an application fee based on the value of the property you want to buy. Therefore, this value may vary slightly depending on the value of the property. You should check before buying. The FIRB provides some guidance in this regard.
In addition to the normal costs of buying a house, you also have to pay foreign stamps. For example, this specific stamp duty is an 8% surcharge levied in NSW on top of the general stamp duty (also known as transfer tax) that all property buyers pay when purchasing a property. All states and territories except the Northern Territory charge an additional stamp duty for foreign nationals.
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Apart from these additions, the process of buying a home and applying for a home loan is almost the same if you are local.
There are serious consequences if you are found to be in breach of FIRB rules. If you are a non-resident or temporary resident who buys a property without FIRB approval, you may be fined based on the number of penalty units for the breach. Depending on the violation, you could be jailed.
How much do I have to pay if I am found to have breached FIRB rules? Each penalty unit is worth $222 and each violation carries a different number of penalty units. For example, you may receive 100 penalty units, which means you will have to pay $22,200.
If you hold a temporary visa such as a partner visa, a 457 work visa, a temporary low-skill visa or a student visa, you will need approval from the FIRB to buy property in Australia. When buying real estate, you are still classified as a foreigner and must comply with the above criteria.
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There are exceptions to FIRB approval. If you are an Australian citizen, you can buy property even if you live overseas. Permanent residents are excluded from FIRB approval.
If you’re a New Zealand citizen, you don’t have to worry about all the extra rules that other foreigners have to follow. This is because New Zealanders have the same rights as Australian home buyers when buying Australian property. However, if you are buying a property abroad, you may have to pay a foreign stamp duty.
Additionally, if you are buying a home as joint tenants with your Australian or New Zealand citizen spouse, you do not need to obtain FIRB approval.
Yes, but it’s not that simple. Most Australian lenders have strict rules that require you to be an Australian or permanent resident to qualify for a home loan. Lenders to foreigners tend to apply stricter lending criteria, including:
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But don’t let that put you off! There are many options such as internationally recognized banks operating in Australia that offer home loans such as HSBC and Citibank.
Each year, we present the Expert Choice Home Loan Awards to help borrowers find valuable home loan options when buying a property.
Keep in mind that only some winners offer foreign home loans. Do your own research before applying.
As anywhere in the world, property costs vary based on many factors including location, size and type. Before buying a home, it’s important to do your research and set a budget.
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Please note: These comparison rates only apply to the example shown. If the quantity and conditions are different, the comparison ratio is also different. Cost savings such as overdraft fees, early repayment fees and fee waivers are not included in the benchmark interest rate but can affect the price of the loan. Comparative interest rates are shown for mortgages with monthly principal and interest payments of $150,000 over 25 years.
Base monthly payments are estimates based on advertised rates only. You can change the loan amount and duration in the fields at the top of this table. Interest rates, fees, costs and total loan costs may vary depending on the loan amount, loan term and loan history. The actual repayment amount will vary depending on individual circumstances and interest rate fluctuations.
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Maria has five years of journalism experience and is currently a financial journalist covering the mortgage, real estate, personal finance and money transfer markets. She also passed ASIC RG146 (Tier 2).
Cameron recently completed a BA in Creative Writing and History and worked at 2SER radio while studying. He mainly writes about savings, banking, home loans and stock trading. He currently holds RG 146 (Tier 1).
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On paper, paying off the rental property seems like a good move. Instead of putting rental income back into your mortgage, you can significantly increase your monthly cash flow. However, if both your investment property and the home you live in are backed by a mortgage, the real question you need to decide is whether to pay off the rental property or your primary residence first.
Choosing whether to pay off your primary home or rental property depends on what you value most. Paying off your rent can increase your cash flow and equity, but paying off your primary residence will keep a roof over your head. Another key factor to consider is the applicable interest rate. There are many complicating factors to consider.
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