What is a non-resident home loan?

Lender policy varies, but applications fall into a few buckets. Temporary visa holders who live in Australia are usually served by a dedicated temporary resident mortgage with its own serviceability rules rather than a non-resident loan. Australian citizens and permanent residents living overseas, usually called expats, are assessed on evidence of overseas residency and income.

Foreign nationals with no residency sit at the strictest end and are often written as foreign buyer loans. Major banks and second-tier banks will look at some of these files but stay conservative on LVR and foreign income. Non-banks and specialist lenders for temporary residents take on more complexity, at a higher price.

LVR caps for non-residents sit below resident levels, and foreign nationals face the tightest caps of all, so plan for a substantially larger deposit. Some lenders also limit the maximum loan size for non-resident borrowers.

On income, lenders convert foreign earnings to Australian dollars, count only a conservative share of the converted figure and apply a higher assessment buffer. The document pack usually runs to a passport and certified identification, visa evidence, payslips and employment contracts, several months of bank statements showing salary credits, and local or foreign tax returns. Certified translations and notarised copies are standard, and lenders often want proof that repayments can be made from an Australian account.

Residential applications under Australia's foreign investment rules are administered by the ATO and decided by the Treasurer, with FIRB advising, and conditions and fees can apply, with fees scaled to the property value. Foreign buyers generally need approval before settlement for new dwellings and vacant land. Established dwellings are closed to foreign persons for the period of the current ban, apart from narrow exceptions. Buying without an approval you need carries penalties including divestment orders.

Start the FIRB check early, because lenders often want the application or the approval in hand before they issue unconditional finance. Expect the loan to cost more than a resident equivalent as well: a rate loading, application and valuation charges, and overseas verification fees. Currency movement is the other live risk if your income sits in another currency. Non-residents can also face different capital gains and land tax surcharge rules, so check with the ATO or your accountant.