Borrowing to avail a home is common in Australia. This is also possible for Australian citizens living and working abroad. However, the process is daunting compared to applying for regular home loans. To increase your chances of getting a home loan approved, even while living abroad, here are some tips you can follow for a successful Expat Foreign Owner Loan.
1. Look for the best loan offer possible
There are many possible lenders and banks that can provide you with an expat foreign home loan. It would be ideal to go to the bank where you have your savings or business account, but, unless guaranteed with the best loan features and interest rates, compared to the ones prevailing in the market, you still have other options to choose from.
Your current bank may offer the convenience factor for you, but it does not guarantee that you are getting the best possible option there is in the market. A mortgage broker can help you determine the best possible loan features for you – including the additional fees and other payments that may be included in your loan application.
2. Keep Your Financial Information Up to Date
Is your financial information current? Prepare the last 2 years of your financial statements, income returns and a notice of assessments, preferably prepared by your accountant. This is where declaring your income religiously is ideal. Banks and lenders rarely accept financial statements that are not lodged with the Australian Taxation Office.
3. Understand How You Are Being Assessed
There are different methods and systems used by banks and lenders in determining the capacity to return a loan through self-employment. Some banks will look into two years of your income while others, lower than 2 years. Again, this differs depending on your bank or lender.
4. Are You Really Self-Employed?
If you are a contractor or sub-contractor, the bank or lender may see you as an employee. Be sure that when checked, you are indeed confirmed to be a business owner and is self-employed.
5. Include Add Backs Provided by Your Business
Does your business offers add backs? This will help increase the income that the bank will be using to be able to determine if you can afford to repay an approved home loan. These include the following:
- Car Allowances
- Depreciation
- Excess Superannuation Contributions
- Non-Cash Expenses
- Non-Recurring Expenses
- Interest Expense that is refinanced or no longer exists
6. Limit Your Loan Interest
Your loan purpose should be quarantined and specific. Being self-employed gives you access to a tax deduction after being granted a home loan. This should not be seen as your purpose for applying for a home loan. Setup the correct loan application structure with your mortgage broker right from the beginning of your application. Getting it wrong at the very beginning of the application will cost you a lot in the long run.
7. How is the ATO Involved in Your Application?
The Australian Tax Office will use your low-document declaration as the proof of your income to determine if it undertakes a tax audit. They will do this for you so you’ll avoid a possible tax headache and financial hardship in the future.
8. Your Credit History
It is always important to protect your credit rating. Whether personally or as a business, your credit history plays a big role in getting a loan approved as well as getting access to the best possible loans and interest rates available for you. A positive credit rating also indicates that your current finances are on the positive, and is capable of repaying a home loan.
9. Is It the Right Home Loan For You?
Your cash flow should be able to fit in a home loan repayment, if the mortgage that you applied for is indeed the correct structures loan for you. This is where are mortgage broker fits in perfectly. A home loan specialists can help you identify the best type of home loan perfect for your circumstance.
Intellichoice Finance can provide you with that expertise and experience. Let us give you a call to help you with your home loan application.
