Mortgage Requirements in Oz

[Guest]

Hello, 

As the rental market seems mental in Oz at the moment, wondering what is a realistic timescale to be able to buy.

We have PR and jobs, but don't start til we arrive in May. 

Good to hear any helpful info. 

Thanks, Ashley 

[JetBlast]

It depends on the state and even local area. House prices have started to drop in most areas but there are some exceptions, Adelaide for example.

You might struggle to get a mortgage whilst you're in your probation perod.

Edited March 6, 2023 by JetBlast

[Guest]

15 minutes ago, JetBlast said:

It depends on the state and even local area. House prices have started to drop in most areas but there are some exceptions, Adelaide for example.

You might struggle to get a mortgage whilst you're in your probation perod.

That's one of the things I was unsure of. 

Thanks 

[Tychen]

May is too close to buy before you arrive - you'd have to rely on your UK jobs, income and credit history, which you won't be able to by the time the sale goes through even if you found something tomorrow. If you are buying after you arrive, think about probation (though depending on your occupation you might qualify for a occupation-specific product even while on probation), and also think about whether you will need time to establish your credit history. If you bank with a bank with operations in Australia, you might be able to get a loan from them more easily. Realistically, I'd say plan on renting for at least 9 months, and actually buying towards the end of the year or early next year.

[Guest]

Not buying before we arrive, but was keen to know on how soon is soon enough. 

Buying market has more availability than rental from various sites and the rentals and so over priced now, just supply and demand of course, but you know what it's like when you feel you're lining a landlords pockets. 

9 months will likely fly in, so may as well settle into that timescale and get comfortable with it. 

Thanks for the info share. 

[Ausvisitor]

Whilst the buying market may seem like there is more availability (and in terms of property available there probably is) what is hidden under that stat is the 30+ prospective buyers looking at each property and the fact that most go to auction and auction prices are almost always quoted (if they even quote) at 10% at least below the vendors minimum sale price.

We went to an auction last week (10 properties being auctioned on the one night) 6 or 7 bidders for each property and all went for at least $200k above guide price (one house was $600k above)

Rental prices are actually cheaper than they should be at the moment, an investors cost to own has gone up over $1,000 a month for the typical $500k loan since may last year (interest rate rises) yet even the worst examples of rent increases are in the $5-600 a month increase range, meaning the landlord is much worse off than they were last year - it's the bank's making money not the landlord here

When you get here you will see the housing stock is generally in a bad state, and it will take you months to adjust your standards to the available options, 9 months seems like the very least amount of time you will be renting. 

As others have said most employers have a 6 month probation period, no lender (or almost none) will touch you in that 6 months. We looked to arrange a small mortgage in case we needed some auction wiggle room and we couldn't get one until 6 months was over, despite having a deposit of nearly $2m and only wanting to borrow at most $200k. Three weeks later after the 6 month probation completed the same bank who refused $200k was quite happy to offer $1.4m as a loan.

 

[Russ1976]

We arrived as PR in October. I started full time employment early November. We have a house which we own in the UK. It was tenanted, so another regular income for us. My wife is a contractor, working for UK companies based here in Tasmania. We have banked here as residents since we arrived. We also have cash/ savings. Taken all this account we thought we could get a mortgage. Unfortunately not. We were offered a mortgage with serious limitations to it, higher borrowing rate, and lower borrowing amount.We have been advised by two respected lenders that after a year of employment and my wife completing a tax return at the end of the Australian tax year will help us. We have since decided to sell our property in the UK, once that happens then our options are greatly improved . Hope this helps.

[Ausvisitor]

You say your wife is a contractor and working for UK companies while in TAS.

Is she doing that through an AUS employment/business model or through a UK limited company.

Because if she is still invoicing through her UK company she won't be classed by the bank as working in AUS and so that 12 months will drag on and on

[Ken]

19 hours ago, Ausvisitor said:

You say your wife is a contractor and working for UK companies while in TAS.

Is she doing that through an AUS employment/business model or through a UK limited company.

Because if she is still invoicing through her UK company she won't be classed by the bank as working in AUS and so that 12 months will drag on and on

If the bank considers the contracting to be self-employment, she'll need 2 years of accounts not 12 months.

[DrDougster]

My very limited (but very current!) experience of mortgages her win Aus is that the process is still much more personal than in the UK.

Depending on your finances, the variable rates online aren't the rates that you can actually get (over 8%vs under 6%) if you ring and go through the details and supporting evidence of your income. Lenders really want new loans at the moment despite the number of fixeds coming to an end, they've not passed on some of the rate hikes and interest rates are likely at or near a peak here now.

[woodymelbourne]

On 06/03/2023 at 07:18, Constance said:

Hello, 

As the rental market seems mental in Oz at the moment, wondering what is a realistic timescale to be able to buy.

 We have PR and jobs, but don't start til we arrive in May. 

Good to hear any helpful info. 

Thanks, Ashley 

Hi Ashley,

I'm a mortgage broker down in Melbourne. A realistic timeline to purchase is probably around 6-12 months based on the following:

- Most lenders require a minimum of 6 months pay slips, although a few will accept 3 months.

- Time taken to find and settle on a property (Usually 30-120 days)

Anyway, I hope that helps a little.

 

Thanks

Tom- Alliance financial group

twood@afgfin.com.au

 

[StevenP]

Interesting post as I am looking to move over next year and would far rather buy than rent. What deposits do lenders expect can you buy with 5-10%?

[woodymelbourne]

10 hours ago, StevenP said:

Interesting post as I am looking to move over next year and would far rather buy than rent. What deposits do lenders expect can you buy with 5-10%?

Hi Steven,

Most lenders prefer at least 10% although there are always some that may go to 5%. Usually the lower the deposit and therefore LVR (loan to value ratio) means a higher interest rate. There is a government scheme that allows you to have a minimum 5% deposit and they act as the guarantor for the 15%, there are obviously conditions involved. It's a challenge to be able to purchase from day 1 as lenders need to see you can service the loan which means having a job for a minimum of 3 months, usually 6.

You can certainly use a smaller deposit but anything under 20% would mean you would pay lenders mortgage insurance (LMI) on top of the purchase price and other fees.

Feel free to email me or reply with any other questions.

Thanks

Tom- Alliance financial group

twood@afgfin.com.au

[Marisawright]

11 hours ago, StevenP said:

Interesting post as I am looking to move over next year and would far rather buy than rent. What deposits do lenders expect can you buy with 5-10%?

Realistically, you're going to have to do both, unless you've got family to stay with when you first arrive.

Most people book a holiday let or AirBnB for the first month, but that's not going to be enough time to find a property to buy.  I say that because properties are "open for inspection" on Saturdays, so rather than having 30 days to view properties, you only really get 4 days.  So you'll need to get a longer-term rental.   Depending where you are, that will be either a 6-month or a 12-month lease. 

[Guest]

On 02/08/2023 at 22:42, StevenP said:

Interesting post as I am looking to move over next year and would far rather buy than rent. What deposits do lenders expect can you buy with 5-10%?

Hi Steven, 

Speaking from recent experience - we have decided to wait until next year to buy for a few reasons. Firstly, the mortgage rates are not ideal just now, secondly if you are still in a probation period at work there is fewer lenders available to you and finally to see if we actually like where we stay. 

We are in a nice area in Wynnum, but i have been surprised by the level of burglary and car theft in the area. We had an agreement in principle to buy before we landed as we arrived with a permanent job and PR status. 

Your visa is a consideration also as it would be harder to buy (not impossible) without PR visa. 

Also, our experience is that we have limited options for less than 15% deposit. This is another reason why we are waiting til next year to see if there is any wider option for us. We have moved from outside Glasgow to Brisbane and the price hike is significant for us. 

A final final thing to say is that you need to account for fees and taxes in your deposit funds, and the start up costs when you arrive are more than you might expect. I researched extensively, but we have went through money like water. Car deposits (higher because we have no australian credit), rego fees, higher insurances, higher customs charges for our shipped items etc. It has really eaten into our house deposit. 

Not intending to scare you off - it's just some things i wish i had better expectations of before we arrived.