In the last month all four major banks have made changes to foreign lending policies, making it difficult for overseas borrowers to access finance in Australia.
The Commonwealth Bank will no longer give mortgages to self-employed applicants using foreign income to service their loans and will no longer approve loans for temporary residents receiving foreign currency income. The maximum loan-to-value ratio for temporary citizens living and working in Australia and being paid in Australian dollars has been lowered from 80% to 70%.
ANZ tightened its rules around lending to foreigners, after the bank discovered that loans written in their network of offices throughout Asia were sometimes missing crucial documentation.
While the banks are making it virtually impossible for foreign borrowers to obtain finance for the purchase of property, there are still options available to overseas buyers in Australia.
Private lenders approach the lending process differently to the major banks. Usually the loan is secured by property equity so private lenders aren’t concerned with overseas income sources and serviceability. This means that as long as a foreign borrower has property assets to use as collateral the lending process should go smoothly.
Despite the changes to the lending practices of many of the major banks in Australia, it should come as a relief to foreign borrowers that there are still options available to access finance through private lenders.
By Tim Hart
Director, Private Mortgages Australia