Are foreign sourced income loans still possible?

In this past month a number of major lenders including ANZ, CBA, NAB & the Westpac Group (including St George, Bank of Melbourne & Bank SA) have limited and/or dropped mortgage lending to foreign sourced income borrowers.

In addition to this, Westpac and ANZ have discovered they have each approved “hundreds” of home loans backed by fraudulent Chinese income documents. Rumours abound that part of the rationale for reducing lending to such applicants by CBA & NAB might be based upon similar issues to those uncovered by Westpac and ANZ.

The Financial Review has reported that the mortgage brokers associated with the spike in fraudulent Chinese income documents have been suspended by the banks pending further investigation.

 

afr-westpac-anz

ANZ and Westpac have approved loans backed by fraudulent Chinese documents. Source: Nicholas Rider, AFR.com

 

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Is there any hope of getting a loan using foreign sourced income?

What kind of circumstances do I need to get a low interest rate as a foreign sourced income borrower from most major lenders?

What are the hallmarks of a borrower with foreign sourced income who would be approved by a niche lender?

What is a common scenario Naritas could imagine a niche lender approving that a major lender may have rejected?

How do I get assistance with getting approved?

 

Is there any hope of getting a loan using foreign sourced income?

Unless you were planning on using a dodgy mortgage broker who has now been suspended or were planning on using a very specific product from a major bank, the short answer is probably: Yes. You still have hope of being approved.

The more accurate answer will depend on your expectations to do with interest rate, how you’re employed & your residency status.

What kind of circumstances do I need to get a low interest rate as a foreign sourced income borrower from most major lenders?

Borrower Type Conditions Maximum LVR
Non-residents

(all applications)

  • For residential lending purposes a non-resident individual is defined as:
    • A person who does not hold an Australian Citizenship or Australian Permanent Residency visa, or
    • A person who does hold an Australian Temporary visa, however, does not reside in Australia
  • No lending is permitted even if the applicant’s income is not relied on to meet serviceability.
  • Guarantees from non-residents are not acceptable as borrowers or owners.
0% – No lending permitted
Australian citizens

(applications involving foreign income)

  • Applications for new purchases only – any refinances are not permitted and no cash out permitted.
  • Self Employed foreign income is not acceptable.
  • Applications including foreign income cannot be owner builders or be eligible for a line of credit.
70%
New Zealand Citizens

(applications involving foreign income)

  • Applications for new purchases only – any refinances are not permitted and no cash out permitted.
  • Self Employed foreign income is not acceptable (this includes NZD income).
  • Applications including foreign income cannot be owner builders or be eligible for a line of credit.
70%
Permanent visa holders

(applications involving foreign income)

  • Applications for new purchases only – any refinances are not permitted and no cash out permitted.
  • Self Employed foreign income is not acceptable.
  • Applications including foreign income cannot be owner builders or be eligible for a line of credit.
  • FIRB approval is not required.
70%
Temporary visa holders ordinarily resident in Australia

(applications involving foreign income)

  • Applications including foreign income are not permitted.
0% – No lending permitted
Temporary visa holders ordinarily resident in Australia

(applications involving AUD)

  • FIRB approval is required.
  • Guarantees from temporary visa holders are not acceptable.
  • Purchase of vacant land (solely) is not acceptable as the lender is unable to monitor any FIRB requirements.
70%

What are the hallmarks of a borrower with foreign sourced income who would be approved by a niche lender?

For niche lenders these applications are assessed ad hoc and the credit criteria is somewhat flexible with rate being largely based upon perceived risk.

As a good general guide,  borrowers will now probably be expected to be a permanent resident or Australian citizen. If you are, rates would typically start around 5%p.a.

For temporary visa holders who don’t meet the criteria listed above may still have options, however, they are likely to experience higher interest rates. Similarly, self employed borrowers with foreign sourced income (regardless of residency status) will find loan approvals increasingly difficult and/or costly.

Counter intuitively (given the recent issues to do with Chinese mortgage fraud) many niche lenders are still looking most favourably upon applicants with income derived from China.

 

What is a common scenario Naritas could imagine a niche lender approving that a major lender may have rejected?

  • Applicant is based in Australia but works overseas on a contract basis as a professional (for example an oil engineer) in various locations.
  • Pays tax overseas.
  • Net income paid into local Australian bank account.
  • ATO does not require ABN.
  • Wants to refinance a house in Australia to get cash out to purchase an investment property.
  • Can provide an accountant letter to assist with explaining their income and tax arrangements.
  • Is approved on the basis that the applicant could verify their income and afford the loan.

How do I get assistance with getting approved?

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.

To make an enquiry online with our team, click here. Alternatively please feel free to phone us on 1300 558 887 during business hours.