Are you a non-resident living overseas but looking to purchase an investment property?
The following client story evokes the expertise of Mortgage Brokers to assist customers in a swift and hassle-free way to receive investment loans.
Summary
| Details | Description |
|---|---|
| Customers | Dr. Marcus and Peggy Joy Baldry |
| Mortgage Broker | Pramesh Vaidya |
| Purpose | The couple want to purchase an investment property. |
| Loan Amount | $616,000 (including Lenders Mortgage Insurance) |
| Security | $770,000 |
| LVR (Loan to value ratio) | 80% |
| Interest Rate | 4.99% p.a. |
| Problem | The primary income earner is a foreign citizen. Moreover, the customer’s foreign income source is self-employed income. The customer also wanted to avoid paying the foreign stamp duty surcharge. |
| Solution | We were able to get the couple approved with a specialist lender. Moreover, we were also able to restructure the loan as an expat loan which reduced the interest rate by 1% or 100 basis points. |
| Takeaways | Mortgage brokers at Home Loan Experts can use their credit expertise and relationship with lenders to get you the amount you need at a competitive rate. |
Story: Non Resident Investment Property Australia
Dr.Marcus Baldry is an American, who works as a Gastroenterologist in the U.S.
His wife, Peggy Joy Baldry is an Australian who stays with him in the US. They decide that they want to get a home loan to buy an investment property in Australia.
The doctor’s net annual earning after-tax deduction is AUD $931,711 from a mixture of PAYG and self-employed income. He had a very high income and stable employment.
The clients have a solid credit history and they have perfect repayment history on all debts.
The couple have a total savings of $188,273.15 which can be used as the deposit.
The property is located at a fabulous spot in Melbourne, overlooking the Port Phillip Bay.
The investment property as per the contract of sale was $770,000.
The doctor had already paid a 10% of the deposit i.e. $77,000 which is required when signing the contract of sale.
Problems
Typically, when an Australian citizen is buying a property in Australia with a foreign citizen, one has to pay the foreign citizen stamp duty surcharge on the foreign citizen’s share of the property, i.e. 50% (his share of the property).
In their case, a $45,841 surcharge would apply.
However, by having just the Australian citizen (the wife) on the property title they could avoid paying the high stamp duty surcharge. This is a good strategy,however, this creates another credit challenge.
Most lenders want the primary income earner to be an Australian citizen or permanent resident. Typically, they won’t consider the foreign citizen’s income.
In their case, the doctor was the primary earner. At best, the foreign citizen’s income would be considered on a case by case basis by select lenders. This is not accepted by most lenders but is considered by a few on a case by case basis.
Moreover, the couple needed to borrow 80% of the property value ($616,000.00). Since most lenders will typically lend up to 60%-70% of the property value for non-residents, the couple had to come up with another 10% or risk losing their deposit.
Solution
The customer came in contact with one of our outstanding mortgage brokers, Pramesh Vaidya. After the initial conversation with the customer, Pramesh immediately knew that the major lenders wouldn’t be able to help Dr. Marcus Baldry.
However, Pramesh knew that there could be a way. After a series of analysis and careful assessment of the submitted documents, he identified a couple of specialist lenders who could lend the couple the amount that they’re looking for.
The specialist lender in question had favorable lending policies for Australian citizens borrowing with a foreign spouse i.e Non-resident loans.
Even then, before a formal recommendation could be made to the client, Pramesh ran the scenario directly with the credit assessor of the banks to ensure that the deal will go through.
Interestingly, the lender’s online loan application system didnt even allow one to select more than 75% LVR for non resident mortgages. Pramesh had obtained many exceptions prior to this. So, he was confident he could get this approved.
Eventually, he was able to request the lender to assess the loan at 80% LVR.
After a series of back and forth with the lender’s credit department, the deal was pre-approved for the full loan amount applied, i.e. $616,000.00 or 80% LVR.
What was even better was that the lender agreed to structure the loan as an expat home loan which comes with a significantly lower interest rate than a non-resident loan.
All said and done, the couple got a great deal with a competitive interest rate of 4.99% p.a. and also saved AUD $45,841 on stamp duty.
Joyous Ending
Dr. Marcus Baldry and Peggy Joy Baldry were grateful to get an amazing deal on their investment loan.
They didn’t have to pay foreign stamp duty surcharge and got a very competitive interest rate.
They expressed their desire to return back as customers in the near future, and even promised to refer Home Loan Experts to their friends.
Are you a non-resident looking to buy in Australia?
If you’re in a similar situation, speak with one of our specialist mortgage brokers by giving us a call on 1300 889 743 or by filling in our short no-obligation assessment form and find out if you qualify within 24 hours.