Foreign Property Buyers in Sydney & Melbourne

Key Insights for International Buyers

As a trusted advisor with over 20 years helping migrants secure mortgages, I’ve seen firsthand how international clients navigate Australian property purchases. Here are some essential insights:

Legal Regulations and the FIRB

The Foreign Investment Review Board (FIRB) oversees all foreign property purchases in Australia. Foreign buyers generally need approval before completing a purchase.

Important: Failing to obtain FIRB approval can result in penalties, including forced sale of the property or hefty fines.

Types of Properties Foreigners Can Buy

New Developments: Most foreign investors prefer buying off-the-plan or new constructions, which are usually allowed.
Established Properties: Purchasing existing homes is more restricted. In some cases, it's permitted if the property will be used as a primary residence or investment with FIRB approval.

Documentation and Visa Requirements

Visa Status: You must hold an eligible visa (e.g., work, student, or temporary visas). Permanent residents are typically allowed to buy established properties without FIRB approval.
ID and Financial Documentation:
- Passport or national ID
- Proof of visa status
- Evidence of funds (bank statements, source of overseas savings)
- Income verification if applying for a mortgage
- Sometimes, a tax identification number or proof of overseas assets

Sources of Funds and Deposits

Foreign buyers often ask, "Can I use overseas savings?" The answer is yes. However, lenders require:

Source of Funds: Clear documentation showing lawful origin of the deposit.
Foreign Exchange: Funds must be transferred into Australia via approved channels and may involve currency conversion.

Navigating Australian Mortgage Options

Getting a mortgage as a foreign buyer can seem complex, but with the right guidance, it’s straightforward.

Who Can Borrow?

Many Australian lenders offer loans to foreign investors. Typically, you need:
- A valid visa
- Stable income (from your home country or Australia)
- Good credit history

Deposit Requirements

Minimum Deposit: Usually between 20% and 40% of the property price.
Lenders Mortgage Insurance (LMI): If your deposit is below 20%, you’ll likely need to pay LMI, a one-time premium that protects the lender if you default.

Interest Rates and Repayment

Rates are comparable to international standards, often around 4-6% per annum.
Repayments can be made monthly via direct debit.
Some lenders offer fixed-rate options for certainty.

Special Considerations

Interest-only loans may be available for investors seeking lower initial payments.
Foreign currency loans are generally not available; funds need to be translated into AUD.

Quote: "Navigating the mortgage landscape requires understanding Australian lending criteria and translating your financial situation into terms lenders understand," says mortgage expert John Smith.

Practical Steps to Purchase Property in Australia

Research and Select Suitable Property

Look at current market trends, upcoming developments, and property types that match your investment goals.
Seek FIRB Approval

Submit your application early, as processing times can range from a few weeks to over a month.
Arrange Financing

Contact lenders experienced with foreign applicants. Provide detailed documentation of income, assets, and source of funds.
Engage a Local Conveyancer or Solicitor

They will handle contracts, due diligence, and settlement processes.
Make an Offer and Execute Contracts

Once approved and financed, proceed with signing the contract and paying the deposit.
Complete Settlement

Transfers of funds, registration of title, and transfer of ownership occur during settlement.

Critical Deadlines and Requirements

FIRB Application: Submit within 30 days of offer acceptance.
Settlement: Usually 30 to 90 days from exchange of contracts.
Foreign Investment Restrictions: Some states have additional rules, so check local regulations.

Addressing Common Concerns

Can I Repatriate Profits?

Yes. You can generally sell your property and transfer the proceeds abroad, complying with Australian foreign exchange regulations.

What About Tax?

Foreign investors pay land tax and, depending on the situation, capital gains tax when selling. Consult an Australian tax advisor for tailored advice.

Will I Need to Open an Australian Bank Account?

Most lenders and property transactions require an Australian bank account for mortgage payments and settlement funds.

Final Thoughts

The surge in foreign property purchases in Sydney and Melbourne reflects global confidence in Australia’s markets. As an international buyer, understanding FIRB requirements, the mortgage process, and legal obligations is vital.

With careful planning, proper documentation, and expert guidance, you can navigate the complexities efficiently. Investing in Australian real estate can be a rewarding step in diversifying your portfolio and securing your international future.

In my 20+ years helping migrants secure mortgages, I’ve seen many succeed by understanding local rules and preparing thoroughly. If you're considering investing abroad, start early, gather your documentation, and seek professional advice.

The Australian property market remains an attractive destination—your opportunity to be part of its vibrant growth story awaits.

Ready to Take the Next Step?

Madhu Chaudhuri

Director

With over 20 years of experience as a mortgage broker, Madhu specializes in helping migrants and expats find loans suited to their unique financial situations. Her expertise in navigating complex lending requirements and understanding diverse financial backgrounds has helped countless families achieve their Australian property dreams.