Buying a property on 457

[yp95]

Hi All,

I recently moved to Melbourne with my wife (who is on a 457 work sponsorship). We would like to stop renting and instead purchase a small house and have a budget of around $600K - $700K. We can put together about $400K for deposit and plan to take out a mortgage for the remainder. The issue we have found ourselves in is that being on a 457 means we incur higher stamp duty costs (7% on top of basic cost) and we miss out on the first time buyer schemes normally available to PR's or citizens. 

I wanted to know if anyone here had any experience of buying a place whilst on a 457 VISA. I recall reading somewhere that if we purchase a house on a 457, we will pay the higher stamp duty however if we subsequently gain a PR within the next 12 months we can apply for a refund of additional stamp duty paid. I cant seem to find where I read this however.

Just wanted to hear of any similar experiences and any helpful tips. 

Thanks

 

[DeeTowers]

Hi There, that is correct as you are not a resident.

You also need to apply for FIRB approval too (Foreign Investment Approval) which is $5-10k (depending on house value) and you need to be careful on which one you choose because you can get a certificate that allows you to go to auction on any property OR approval to purchase a dwelling with a known address but becareful if it falls through you have to buy another approval for any other dwellings you wish to purchase.

We went the Auction certificate route as Sydney is all auctions and were ok but have since become residents.

You will find a lot of obstacles because you are not a resident - I would wait until you get residency because a 457 is only a temporary visa - what if you get made redundant? You MUST sell your house in accordance with FIRB rules as you cannot rent it out and go back to the UK.

Think long and hard - we did and only decided to buy because our PR was nearly processed and we wanted the house we bid on.

https://firb.gov.au/real-estate/

Also you do ot get a refund on FIRB approval if you get PR before you settle - We were 457 at auction but got PR 3 weeks later before settlement on the house and the FIRB said tough luck! We factored the cost into our Sydney house though and have more than made it back :-)

Good luck :-)

 

Edited April 11, 2017 by DeeTowers
more info

[LKC]

There is a bit of information on here about the stamp duty situation https://www.homeloanexperts.com.au/non-resident-mortgages/foreign-citizen-stamp-duty/, and of course as DeeTowers mentioned there is a fee for the FIRB approval too.  If you decide to go ahead, you might be able to get a better deal on your mortgage through a mortgage broker.  This is what we did when we bought our house, although this was about eight years ago.  It seems that the stamp duty situation has changed quite recently, and adds a significant amount onto the costs of buying a home.  I'll be honest, it would probably put me off buying on a 457.  

Have you already applied for PR?

[DeeTowers]

3 minutes ago, LKC said:

There is a bit of information on here about the stamp duty situation https://www.homeloanexperts.com.au/non-resident-mortgages/foreign-citizen-stamp-duty/, and of course as DeeTowers mentioned there is a fee for the FIRB approval too.  If you decide to go ahead, you might be able to get a better deal on your mortgage through a mortgage broker.  This is what we did when we bought our house, although this was about eight years ago.  It seems that the stamp duty situation has changed quite recently, and adds a significant amount onto the costs of buying a home.  I'll be honest, it would probably put me off buying on a 457.  

Have you already applied for PR?

I agree - Everything has changed so much in the past 2 years for non PR purchasers - We brought last year and only 2 banks would lend to a 457 holder (Wespac and St George) So we had pre-approval for St George but as we got PR During the settlement period we got a better deal with another lender and went with them. 

 

[LKC]

We were lucky with our house.  There was a six month long period about eight years ago, when you didn't need to apply for FIRB approval, and we just happened to buy a house during those six months.  I think there were a couple of banks who wouldn't loan to us on a 457, but it wasn't too hard to find a mortgage back then.

[yp95]

Thanks for the responses.

 

No we havent applied for a PR and it may take a while to come through still. Also we are aware of the FIRB so will keep an eye out for approvals that cover "any" auction property as this could save us 1000's rather than risk loosing the auction (and the FIRB approval with it).

 

Seems as though we have a rocky road ahead if we really want to buy a place of our own. The downside of waiting for a PR is rising house prices and lack of supply. We either pay extra now and secure a good location, or wait for PR and save some money but risk loosing out on preferred suburbs. Tough one!!

 

 

[DeeTowers]

13 hours ago, yp95 said:

Thanks for the responses.

 

No we havent applied for a PR and it may take a while to come through still. Also we are aware of the FIRB so will keep an eye out for approvals that cover "any" auction property as this could save us 1000's rather than risk loosing the auction (and the FIRB approval with it).

 

Seems as though we have a rocky road ahead if we really want to buy a place of our own. The downside of waiting for a PR is rising house prices and lack of supply. We either pay extra now and secure a good location, or wait for PR and save some money but risk loosing out on preferred suburbs. Tough one!!

 

 

If you get the FIRB Auction pass this covers you for multiple auctions so if you do not win one you can use it for the next, and the next etc... for up to 12months - you cannot however make an offer before auction as this would be the other approval for a named dwelling. Agree with the house prices and we found a cracker that we wanted to go for so paid the $10k for the auction FIRB pass which we are glad we did as we got the house which has increased by a significant amount over the past 10 months which has more than covered the outlay of the FIRB piece of paper! 

Good Luck!!

[Annie_H]

I believe there is an application fee of 5,000 and if you dont purchase or your not approved they don't refund. 

 

[path2aus]

We bought a home in the US on H1B visa with GC processing in progress. Now thinking back it was a very bad idea. We decided to leave USA due to extremely long GC waiting times for heavily backlogged countries. We moved to Australia and we are struggling to sell our home in the US. Coordinating with an Agent staying overseas is a pain with the time difference and stuff. If we could just go back and reverse the decision to buy the house, we would have been in much better situation. Now I am paying mortgage in the US and also paying rental here in Australia. Not a great situation to be in. So unless you at least have a PR application pending, I wouldn't suggest to invest such high sum on a home. That is just me though through my experiences. 

[Collie]

You are assuming that house prices will keep rising.  A lot of indicators and commentary that price growth is set to slow (at a minimum), particularly in Melbourne and Brisbane.

IMO - get your PR first to avoid all the hoops (&$) you need to go through.  Also with the recent changes to 457s and general tightening up of migration criteria etc, it is worth getting before the rules get harder again.

You have a great deposit already, keep adding to it while waiting for your PR to come through.  Oh and I second the recommendation to use a broker for any mortgage,

& a point of information re Westpac and St George - they are basically the same lender, just 2 different brands.  Westpac bought St George about 10 years ago.