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By Mortgage Street
14 January 2022
Can Clients Get a Loan in Australia to Buy a House Overseas?
Buying property overseas is a popular investment option for many Australians. Whether they want to take advantage of a country’s capital gain trends or because they have a connection to the area, your clients may wish to purchase a house overseas. While they cannot secure a loan to fund their purchase directly, there may be available options if they currently own property in Australia.
The Benefits of Owning Australian Property
If your client owns property in Australia, they may be able to use the equity that exists in their home to buy overseas property. As long as they have less than 70% of their mortgage remaining, they can cash out their equity with your help and invest in property overseas. As long as they don’t borrow more than 80% of the property’s value, they should get approved for a cashout.
How Much Can They Borrow?
Most countries will limit your client’s borrowing power to an 80% loan-to-value ratio. This limit requires your client to use their funds for a 20% deposit plus an extra 3-5% of the property’s value to complete the purchase. The additional costs should cover any relevant stamp duties, conveyance fees, and other legal fees for the country they are purchasing property in.
Buying property overseas can be a complex process. Between foreign exchanges, taxes in both Australia and the country the property is located in, and relevant tax deductions, it may be hard to determine if purchasing an overseas property is a good investment for your client. In addition, you and your client may want to speak to a mortgage broker specialising in international investments to understand the country’s interest rates and mortgage terms.
If you have a client interested in purchasing a property overseas, Mortgage Street can help. We can sit down with you and your client to discuss whether they are eligible for a cash-out on their existing Australian mortgage. We can also help them understand the fees and terms associated with overseas investment to help them decide if investing in overseas property is worth the effort.