Borrowing money to buy a home when you are a migrant can be challenging, but it is not impossible. In most cases, migrant mortgage lenders require the buyer to pay a substantial down payment—but there are ways to reduce that burden.
If you have migrated to Australia and are trying to get a mortgage without a large down payment, take a look at these ideas:
1. Make your residency as permanent as possible
A mortgage is a long-term loan, designed to be paid back over a fifteen- to thirty-year time period. When the bank decides whether or not to grant you a mortgage, they want to be reassured that you will be in the country for the duration of the loan.
If you are in Australia as a temporary resident, you need a long-term working visa at a minimum. Ideally, you should try to establish permanent residency. That can help to increase the percentage of the home's value that the bank will grant you in your migrant mortgage.
2. Marry an Australian resident
If you are in a relationship with an Australian citizen, it may be time to consider getting serious. If you marry each other and apply for the mortgage together, you may be able to get a mortgage that covers more of the home's purchase price than you could get on your own with a migrant mortgage.
Depending on the down payment you are required to pay, that may represent a significant savings. For example, if you were buying a home that cost $250,000, you would have to pay a $50,000 down payment if you only qualified for a mortgage that covered 80 percent of the home's price. In contrast, if you were able to qualify for a 95 percent loan, your down payment would be a mere $12,500.
3. Apply for the First Home-Owners Grant
If you have never bought a home in Australia before, you may be able to use the First Home-Owner's Grant (FHOG) to offset the amount of your down payment.
The value of this grant varies, but in some states, it can be up to $10,000. Unfortunately, if you are a temporary resident taking out a migrant mortgage, you will not be able to qualify for the FHOG, but if you have followed the ideas above and made your residency permanent or married an Australian citizen, you can qualify for this grant, regardless of your country of origin.
4. Have clear documentation of foreign assets
Whether you are a migrant or a citizen, you have to prove to the bank that you can afford to repay the mortgage. In most cases, that means providing proof of income as well as your assets.
Do not forget to leverage your foreign assets as part of this process. If you own homes or have savings accounts in your country of origin, gather documentation of those assets. If possible, consider moving some of your foreign assets to Australia to help stabilise your financial picture. The more stable you appear on paper, the more the bank will be willing to lend you.
5. Move permanently to Australia
If you are a migrant who resides in Australia on a part-time basis and you are trying to buy a home, you will not be able to borrow as much money as you would if you permanently lived in Australia.
Whether you are buying a holiday home or an investment property, move to Australia and establish permanent residency before applying for the loan. That will help to lower the amount of the down payment you need to provide.
In the past, there was one notable exception to this rule: migrants from New Zealand. If you lived in New Zealand and were trying to buy a home in Australia, you used to be treated like an Australian citizen by most mortgage lenders. Unfortunately, as of May 2015, that changed, and now, New Zealanders are expected to come up with large down payments for migrant mortgages unless they establish permanent residency in Australia.
Learn more about your options and how you can pay off these loans by contacting resources like Migrant Finance.