Temporary residents holding a 457 visa are eligible for a home loan in Australia, though you’ll need to provide proof of income stability to your lender. Additionally, you will require special permission from the Foreign Investment Review Board (FIRB).
If you meet these requirements, you can apply for a home loan for up to 80 per cent of the property value. However, you cannot take advantage of the First Home Owner’s Grant (FHOG) unless you buy the property jointly with a permanent resident spouse or an Australian citizen.
Types of loans available for temporary residents
Home loans for temporary residents in Australia are standard packages similar to those available to permanent residents and citizens. The differences may be in the maximum loan amount and deposit requirements. Based on your employment stability and income, you may be able to borrow up to 90 per cent of the property value as the loan amount.
The types of loans may include:
- A basic loan with a lower variable rate of interest and a loan term of 30 years, with the option to pay interest only for as long as 15 years in total.
- A standard variable home loan with a competitive rate of interest, plus a redraw feature that will allow you to withdraw any extra repayments you make.
- A fixed-rate loan for a rate of interest that remains constant during the one to five year fixed term.
Is foreign income considered in your loan application?
You may earn an income through investments, pension, or a business from a foreign country, and would like to use this income to help pay your home loan for temporary residents of Australia. However, not all lenders accept foreign earnings as part of your income to determine your loan eligibility. Some institutions may consider this income if you’re an Australian resident for taxation purposes and declare the foreign earnings on your Australian income tax returns.
A few lenders accept international tax returns, pension statements, and rent receipts as income to determine your home loan eligibility. Generally, institutions limit this income to 80 per cent while assessing your borrowing power to allow for fluctuations to the foreign exchange rates.
You can also check with the lenders about non-resident home loans to determine your eligibility.
How much can you borrow as a home loan?
To determine your home loan amount, lenders will typically look at your type of visa, employment stability, income, and financial situation. Generally, the applicable limits are as follows.
- If you work under the short-term skilled occupation list (STSOL) for one or two years, the amount is limited to 80 per cent of the property value.
- If you have stable employment with a steady income and work under the medium and long-term strategic skills list (MLTSSL) for four years, lenders may grant 90 per cent of the property value as the loan amount.
- Irrespective of your visa status, if you are married or in a de facto relationship with an Australian citizen or permanent resident, you may be eligible for a loan of up to 95 per cent of the property value.
Advantages and disadvantages of temporary resident home loans
Generally, you receive the same terms and conditions as those available for permanent residents and Australian citizens with no additional monthly payments. Under some circumstances, lenders may allow you to delay your mortgage payment or use an offset account.
However, you will require approval from the FIRB before applying for the loan, and you won’t receive the FHOG or other government benefits.