Buying property in Australia – a currency perspective
Finding your ideal property investment requires lots of research but once you’ve found it, it’s important to note that the hard work is not finished.
The guide below will take you through some of the legal processes involved in buying a property Australian property using foreign currency as well as showing the different ways that you can transfer the funds to pay for your property.
The legal process
If you are a ‘foreign citizen’ (ie. not a permanent resident of Australia) and want to buy a property or residential real estate in Australia, you must get permission from the Foreign Investment Review Board (FIRB) who are an advisory board of the Australian Government. This process exists to make sure all foreign investments are in keeping with the community needs. Typically, it will take 30 days for the application to be reviewed. If you want more information about this process and what influences the FIRB decision, check our guide here.
If you’re a permanent resident or Australian citizen who is presently working abroad, you won’t be required to get FIRB approval but it is strongly advisable to utilise the services of an experienced legal professional with strong expertise in property settlements to ensure that the process runs efficiently. It is also becoming increasingly common for buyers located abroad to utilise the services of a buyer’s agent to facilitate with the process of selecting & negotiating on the property purchase, and subsequently project managing the family’s possession of the property or its rental to a good tenant.
Transferring your funds
Many people who are buying property overseas still use their bank to transfer their funds as it can often seem like the easiest option, but it is not necessarily the most cost effective.
Comparing the exchange rates offered by your bank with, for example, an International Money Transfer Service such as HiFX who offer the same level of security as banks without the additional fees, could mean you save typically between 1 and 4%. This might not sound like a lot but if you are transferring £100,000 this is a saving of up to £4,000.
There are various other benefits to using an International Money Transfer Service. Most will offer ‘forward contracts’ allowing you to fix the cost of the deal at today’s exchange rates. Essentially this is a ‘buy now, pay later’ scenario.
Remember, it often take over 1-3 months to complete a property purchase. With exchange rates changing every 3 seconds, even a small drop can have a real impact on your overall cost. This is therefore a useful tool for those on tight budgets who don’t want currency movements to shift against them.
After you’ve purchased the property, you might still be required to make regular currency transfers – be it for mortgage payments or accepting deposits/rental payments.
Buying currency on a regular basis can often be time-consuming and costly – partly as many of the high street banks charge hefty transfer fees and build significant margins into the exchange rates they offer.
Larger International Money Transfer services will allow you to automate these payments via direct debit. In addition, International Money transfer services like HiFX will allow customers to fix exchange rates up to 12 months in advance, helping customers protect themselves from adverse movements in the currency markets.
How do I get assistance with finance approval for a loan with foreign currency considerations?
The team at Naritas are experts in delivering timely guidance & finance approvals. We have over 100 lenders on our panel & a high quality team of dedicated advisers to steer you efficiently through the approval process.