Non-resident and expat lending is a very interesting and often misunderstood segment of the local lending landscape. This is primarily due to the fact that there has been, and continues to be quite a bit of change with regards to lenders and their appetite for these types of clients and their transactions.
It is important to clarify who lenders classify as non-resident applicants and who are not. Importantly, Australian citizens who live abroad are not classified as non-residents – these clients are typically referred to as “expat” clients and the majority of lenders have fairly standard policy for these types of applicants which we will touch on below.
Lenders classify non-resident applicants as applicants who are either:
- Not Australian citizens and who live outside of Australia
- Not Australian citizens and who live temporarily in Australia – temporary visa holders.
With regards to non-Australian citizens who reside outside of Australia, there are specialist lenders who can assist these clients however they have varying degrees of requirements. A standard requirement for all of these scenarios are that these clients require FIRB (foreign investment review board) approval. Some lenders have quite conservative LVR (loan to value) restrictions whilst others don’t. Some lenders have restrictions on which countries these clients reside in and their income is generated out of, whilst others don’t.
Temporary residents in Australia tend to have a few more options, however it is very specifically based on the type of visa they hold. If the bank accepts their temporary visa, they are almost treated as normal Australian resident applicants, however if they don’t accept their type of visa, they have to fit into the category above. Again, different lenders have differing policy when it comes to which visa they accept and which they don’t, it’s just a case of finding the lender who accepts that specific visa.
Where expat clients are employed and get paid a regular salary, most lenders are happy to deal with these applicants in a fairly straightforward manner. Most of the lenders will reduce or shade the income that can be used for assessment purposes and different lenders have varying degrees of inclusion when it comes to the currency that the income is being earned in. Self-employed expat clients however are far more restricted in terms of their options, however, importantly there are options available for these types of clients.
In summary, whilst there is a great deal of misconception and misunderstanding when it comes to this space, at the moment, importantly, there are solutions for these clients. Some of those solutions might be of a more specialist nature, whilst some clients might fit into lenders’ traditional offerings. We have experience in this area and are able to work with you and these clients in figuring out what their options are, whatever those may be.