Your Guide

to Buying a Property on
a Temporary Visa

www.diamondlendingsolutions.com.au
 Table of Content

Introduction 03
Can I buy a house? 05
What is the process? 06
How much can I borrow? 18
What grants can I get? 20
How much deposit do I need? 23
What other fees will I pay? 24
Next steps 29

02
Introduction

You have already been on a huge journey to gain the privilege of living in Australia
as a Temporary Resident and you will have learned so much and overcome many
challenges and hurdles along the way.

So now you are considering purchasing your first home here in Australia and the
thought of the additional fees and the extra steps you have to take as a temporary
resident to achieve this is leaving you wondering whether it’s even possible and if it
is, is it the right thing to do.

As someone who has first hand knowledge of this exact scenario, I want to share
the journey with you and provide you with the information you need to decide
whether buying a property on a temporary visa is right for you.

So who am I and how can I help? My name is Abby and I moved to Queensland in
2018 from the UK on a temporary visa (489 Skilled Regional). In the UK I was a
mortgage adviser for a big bank, and when I got to Australia I knew I wanted to
continue my career in this field and embrace the challenge of learning about the
property buying process here.

So here I am, a mortgage broker with 12 years experience but I also have first hand
experience of going through the process of obtaining a visa, moving to a new
country and buying a house on a temporary visa.

Looking back, it would have been really helpful to have a guide to tell me
everything I needed to know about getting on the property ladder in Australia, and
I am now in the fortunate position that I am able to offer this to you and hopefully
make your journey to home ownership a little bit easier.

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What will you learn from this guide?

This guide will outline:

The property buying process for a temporary visa holder

What you can do to strengthen your position to ensure this process goes
smoothly

What grants may be available to you as first home buyers

How much money you will need to contribute to the purchase including
deposit and fees.

So let’s get started.

Abby Suckling
Finance & Mortgage Broker
0477 749 200
abby@diamondlendingsolutions.com.au

(Abby is a credit representative (546600) of BLSSA Pty Ltd

ACN 117 651 730 (Australian Credit Licence 391237)

www.diamondlendingsolutions.com.au 04
 Can I buy a house?
As a temporary resident living and working in Australia, you are eligible to buy a
house, but like with most things on a temporary visa, the government don’t make it
easy!

For the purpose of buying property, you are considered as a foreign buyer and as a
result you will need to obtain permission to buy here in Australia as well as paying
additional fees for the privilege. You may be eligible for a stamp duty concession or
waiver as a first home buyer, which is helpful.

I will discuss this in more detail later on. You will also find that it may be more
difficult to obtain a home loan as a lot of lenders are not willing to accept
temporary visas, however there are finance options for you and a broker is able to
access their panel of lenders to find the most suitable lender for your situation.

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What is the process?

Each state in Australia is governed by different laws that have an effect on

Government costs, grants and concessions, and contract laws (such as whether a
cooling off period is applicable).

However, the general process of buying a property should be similar regardless of

which state you choose to buy in. As a brief overview, the process will be as
follows

Check your finances

Obtain a pre-approval

Obtain FIRB approval

Find your house

Make an offer to purchase

Confirm your finance

Settlement

Let’s explore each step of the process in more details.

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 Check your finances

Before you start house shopping, it is a good idea to think about how much you
feel comfortable spending on a property and then find out if this is achievable by
finding out how much you can borrow and what amount of funds you would need
to contribute to the purchase.

This is particularly important on a temporary visa as there are limited lenders who
will be prepared to accept your situation and they are likely to have restrictions in
their policies around this too such as a larger deposit or requiring a certain period
remaining on your visa.

There are a number of factors that affect your borrowing capacity and ability to
borrow, including income, expenses, credit history, employment, visa status and
deposit available, therefore it is important to prioritise this step at the beginning on
your journey to ensure you are working towards a realistic goal.

So how do you find all of this out? You will need to speak to a home loan specialist,
either through a bank directly or via a mortgage broker. I get a lot of people asking
whether it is best to speak to their bank or a mortgage broker.

Everybody’s situation is different and there are various scenarios that may not be
acceptable to all lenders such as whether all income sources can be used, if you
have been in your job for a short period of time, and most importantly your visa
status. A bank is only able to advise on their own policies and products, which can
be restrictive, whereas a mortgage broker can advise on products and policies from
their panel of lenders to find the most suitable lender and product for your specific
situation.

For example, you may approach your bank and tell them you are on a temporary
visa and based on their policy they may tell you they cannot help until you are a
permanent resident, whereas a mortgage broker has experience of which lenders
will consider this scenario without the need to wait.

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In most cases, a mortgage broker does not charge a fee for their services as they
receive commission from the lender when your home loan settles.

A home loan specialist will also be able to advise you on how much deposit you will
need and any other fees and charges you will need to pay so you know if you are in
a position to buy at this time or need to save more funds. We will look at deposits,
fees and charges in more detail later on.

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 Obtain a pre-approval

A pre-approval is a finance application that can be submitted prior to you finding a

specific property.

Lenders approach pre-approvals in different ways, some of them do not offer them
at all, while others will not fully assess the application until you have found a
property so the outcome decision is computer based only.

Some lenders will complete a full assessment though, and this can be really helpful
if there are unusual circumstances or credit history issues. There are a number of
reasons why obtaining a pre-approval is a great idea:

Once you have signed a contract, it can make the process to

formal approval and settlement quicker because you have
Quicker
already submitted the application to the lender and provided
your supporting documents (you may need to provide updated
documents depending on how much time has passed since the
pre-approval was granted).

Real estate agents will often ask if you have a pre-approval to

Stronger provide them with reassurance you can borrow sufficient funds
Position to purchase the property, and in turn your offer may be
considered more strongly by the seller.

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 If you intend on purchasing at auction, it is really important to
have a pre-approval in place as you pay a non-refundable
Auction
deposit on the day of the auction if you win, and you do not
have the option of having a finance clause on your contract so
if you cannot obtain finance you will lose your deposit and may
be subject to other fees.

A pre-approval gives you peace of mind that you can obtain a

Peace of home loan for a certain amount so that when you find your
Mind dream property you have confidence that it is attainable.

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 Obtain Foreign Investment Review Board
(FIRB) approval
The FIRB is an Australian government department that assesses applications from
foreigners who would like to buy a home in Australia. As a temporary resident, you
need approval from the FIRB and there are a couple of points during the process of
looking for a property that you can apply for this.

If you definitely plan on buying a house within 12 months, you can apply for an
exemption certificate which allows you to make multiple attempts to buy one
unspecified property, in a specified state or territory, without having to seek
individual approval for each property you are interested in.

Temporary residents can use an exemption certificate to purchase an established

dwelling to live in while residing in Australia. Alternatively, you can apply for FIRB
approval when you have chosen a specific property to buy.

The cost for both options is the same and this cost is dependent on the value of the
property you plan on buying. See below for the current costs:

Less than $75,000 $4,200

Between $75,000 – $1,000,000 $14,100

Between $1,000,001 – $2,000,000 $28,200

Between $2,000,001 – $3,000,000 $56,400

Between $3,000,001 – $4,000,000 $84,600

Between $4,000,001 – $5,000,000 $112,800

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You can buy an investment property with FIRB approval, however it must be a new
property or vacant land to build a new property. As a temporary resident you do
not need FIRB approval if you are buying the property as joint tenants and you’re in
a spousal relationship (married or defacto) with an Australian citizen. In this
instance you can buy a new property, existing property or vacant land and it can be
for you to live in or as an investment.

To lodge your application you need to complete the Australian Tax Office’s
Residential Real Estate Application Form. You’ll need to provide your contact
details, full legal name, address of the property and pay the required FIRB approval
fee. Have your passport and Australian visa (if applicable) handy as you’ll need to
enter those details.

If you don’t know the title details of your property, then you can leave these blank.
For new properties, they often do not have title details until a few weeks before
they are complete. The statutory timeframe for making a decision on an application
is 30 days however this will not start until the correct fee has been paid.

The FIRB fee is generally not refundable, so if you do not go ahead with a property
purchase you will not be eligible to get your money back, so it is important you are
certain you are going to buy a house when applying.

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 Find Your House

This is the exciting part where you can go house shopping! Most people start
looking for properties for sale via online sales listings or through a local real estate
agent. However, there is also the option to use a Buyer’s Agent who will charge
you a fee to find your perfect property and negotiate a deal on your behalf. This
can be a good option if you are unfamiliar with an area or have very specific
criteria.

You will notice that auctions are popular when it comes to selling property in
Australia, and this may not be something you are familiar with. It is important to be
aware that if you purchase a property at auction in any state in Australia there is no
cooling off period, which is why you need to ensure your finance is in place via a
pre-approval so you can be confident you are in a position to complete the
purchase. If you do not already have FIRB approval, you will not be able to buy a
property at auction.

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 Make an Offer to Purchase

You have found your dream property and it ticks all of the boxes, so what next?
You need to submit an offer, which is usually done via a standard form prepared by
the real estate agent.

As well as the price you would like to offer, there are also some ‘Subject to…’
clauses you may wish to include such as the following:

If you have already got a pre-approval you will know the

Subject to lender you are likely to go with for your finance so you can
Finance include this in the contract. In the current climate, a 21 day
finance clause is ideal, however 14 days is also possible.
Anything less than this would be very tight and could end up
in you needing to request a finance extension and the
contract possibly being cancelled on this basis.

It is highly recommended to get an inspection completed on

Subject to the property to ensure there is no termite damage or
Building/Pest/ structural issues. If the inspection report shows anything
major, you can either pull out of the contract if you are not
Termite
prepared to proceed, or you can negotiate the purchase price
Inspection
depending on the work required to fix the issue. A 7 day
clause is sufficient for the inspection, as this will give you
enough time to find an inspection company and receive the
report back once inspected.

if you have not already applied for the exemption certificate

Subject to FIRB – A 30 day clause will be required here as this is the
timeframe given by the FIRB, although it is usually quicker
approval
than this.

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The real estate is likely to tell you to put very short time frames for these clauses to
‘strengthen the offer’, however do not feel pressured into doing this as the process
from signing the contract to settling your home loan takes time and there can be
various hurdles along the way so allowing enough time is important.

You will also need to include a settlement date or time frame on your offer and this
is usually a specific number of days from the date of the contract. If you opt for a
21 day finance, it is recommended to go for a 45 or 60 day settlement.

You may find that your initial offer is not accepted but the seller comes back with a
counter offer. You can then continue the negotiations until you settle on a price
you are both happy with. The contract is not considered to be fully executed until
all parties have signed, at which point the timeframes for the clauses come into
effect.

It is a good idea to have a solicitor/conveyancer in mind when you are putting

offers in as you will need to engage one as soon as your offer is accepted. They are
able to review the contract prior to you signing it, and will then let you know what
is involved from their side from signing the contract through to the day of
settlement, including their fees.

The real estate will often recommend a solicitor or conveyancer but you are not
obliged to go with their suggestion and can choose anyone you like. You may wish
to engage a solicitor who is familiar with the home buying process for a temporary
resident.

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 Confirm Your Finance

Once your offer has been formally accepted, you will need to contact your finance
broker or lender to let them know and they will then request specific documents
including the fully executed contract of sale in order to prepare your finance
application. If you already have a pre-approval in place, this may just involve
providing updated payslips, statements, and the contract of sale.

If you do not already have an exemption certificate from the FIRB you will need to
apply for approval at this point and provide the approval document to your broker
and the solicitor once received. Your broker will advise you regarding loan
structure and product types and will prepare your application to submit to the
lender.

Once the application has been submitted, your broker will communicate with
yourself, the lender, the real estate agent and the solicitor to ensure the process
runs smoothly right through to settlement day when the property ownership is
legally changed to your name.

Once your loan is formally approved, you will receive loan documents from the
lender to review and sign. Nowadays, the majority of lenders send documents
electronically and they can be signed electronically too, however there are some
instances when the documents will need to be printed and signed, but your broker
or solicitor can assist with this.

You will also need to organise building insurance for your new property noting your
lender as an interested party. Once received, you will need to provide a copy of the
insurance to your broker who will then send it on to the lender ready for
settlement.

This is a lender requirement for all loans unless they are covered by separate
insurance via Body Corporate, which typically applies to apartments and units.

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 Settlement

Your solicitor, the lender and your broker will keep in communication with you and
each other in the run up to settlement to ensure all parties are ready and
everything has been completed to ensure settlement day goes smoothly. Once the
lender has received and verified all of your signed loan documents they will liaise
with the solicitor to advise the amount of funds that they will make available on the
day of settlement.

At this point, the solicitor will prepare a settlement statement and provide a copy
of this to you and the broker. This will advise you of the funds to complete amount
you will need to transfer either to the solicitors trust account or to a bank account
that your lender has opened for you in your name prior to settlement day.

As this is likely to be a large amount, it is recommended that you do this via a bank
transfer in branch to ensure funds are transferred immediately.

If you are transferring funds to the solicitors trust account it is very important that
you call the solicitor to confirm the account details they will have provided via
email as there have been stories of emails being intercepted and bank account
details being changed. Once the funds to complete are in the nominated account,
the settlement can happen.

You do not need to be present on settlement day but it is a good idea to ensure
you are contactable in case of any issues. You are usually given a time for
settlement but this is often pushed back depending on various factors so it is not
always a good idea to book your removalists and plan to move in on the same day
as settlement in case it is delayed until later in the day.

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 How much can I borrow?
The amount you can borrow is dependent on a number of factors including, but not
limited to:

This may seem like an obvious one, but it is not just about the
amount of income, but also about what your income is made up
Income of. If you have irregular income, or you do a lot of overtime or
shift work, this will all have an impact on how much you can
borrow. With income, it is important to show that it is
sustainable so the lender is confident in your ability to make
repayments to your home loan without being put into any kind
of hardship.

It is important that you review your living expenses and ensure

Living your spending is well managed prior to applying for a home
Expenses loan. Some lenders will require bank statements and these will
be reviewed to ensure the declared living expenses are
accurate against your statements. Good conduct on your
statements is very important to show that you are able to
manage your money and will have sufficient funds to repay
your home loan.

If you have any liabilities such as credit cards, personal loans or

car leases, we will need to take the balances and repayments
Liabilities
into account which will impact your borrowing capacity.

It is important to note that with credit cards, the bank

calculates the monthly payment based on the limit and not
your actual balance so even if you do not use the card this will
still be classed as a liability.

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 The more savings you have, the less amount you will need to
borrow and therefore your monthly repayments will be less.
Savings
Having a good savings record also shows the lender that you
have surplus funds and are good at managing your finances so
it can strengthen your application. Ideally a 20% deposit would
be a great aim, but the minimum deposit can be as little as 10%
although you will pay Lender’s Mortgage Insurance if you put
down anything less than 20% (I will explain Lender’s Mortgage
Insurance later). You will also need to ensure you have
sufficient savings to cover other costs such as stamp duty, legal
fees, moving costs and insurances.

19
 What Grants Can I Get?

There are a number of government grants and schemes available to first home
buyers at both national and state level. Unfortunately as a temporary resident, you
are not eligible for the majority of these. You may however be eligible for a waiver
or concession of the stamp duty depending which state you are buying in.

The waivers and concessions can change so it is best to check with your broker to
find out what is available at the time you are looking to purchase and what you may
be eligible for based on your circumstances. Here are some links to some of the
grants, waivers and concessions you may be eligible for:

Nationwide Government Grants and Schemes

First Home Super Saver Scheme (FHSSS) – If you have made voluntary
concessional contributions to your superannuation, you can apply to
release these funds to help you purchase your first home.

You must meet the eligibility requirements and further information can
be found here.

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 State-Specific Grants and Schemes

First Home Owner’s Grant (FHOG)

This is a national scheme funded by the states and territories, and under the
scheme a one-off grant is payable to first home owners that satisfy all the eligibility
criteria. For state specific information, see below or click here and simply select the
state you are going to buy a property in.

Australia Capital Territory (ACT)

Home Buyer Concession Scheme – This scheme helps people to buy their first
home by removing or reducing stamp duty on any property they want to buy.
Eligibility is based on the total gross income of all buyers, including their partners
and further information including the income threshold can be found here.

New South Wales (NSW)

Not available to temporary residents

Northern Territory (NT)

Not available to temporary residents

Queensland (QLD)

First Home Concession - You can claim a first home concession for transfer (stamp)
duty when acquiring your first residence if you meet certain requirements. The first
home concession only applies to a home valued under $550,000 and means you
will not pay any stamp duty if the property is under $500,000 and will receive a
concession for a property between $500,000 and $550,000. More information can
be found here. The home concession may still apply for a home valued over
$550,000. More information can be found here.

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 Victoria (VIC)

Not available to temporary residents

South Australia (SA)

Not available to temporary residents

Western Australia (WA)

Home Buyers Assistance Account - A grant from the Home Buyers Assistance
Account reimburses some of the incidental expenses incurred when purchasing a
first home in Western Australia, provided the applicants meet all criteria.

Eligible applicants receive a grant of up to $2,000. Incidental expenses can include

mortgage registration fees, solicitor and/or conveyancing fees, valuation fees,
inspection fees, establishment fees, mortgage insurance premiums and lending
institution fees associated with the purchase of your first home.

The scheme is funded from interest paid on real estate agents' trust accounts. For
more information, please click here.

Tasmania (TAS)

Not available to temporary residents

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 How Much Deposit Do I Need?

In Australia, if you have anything less than a 20% deposit you will usually pay
Lender’s Mortgage Insurance (LMI) which is a premium that protects the lenders in
the event that the borrower is unable to repay the loan. The LMI can be paid
upfront or added to the home loan.

It is possible to purchase a property with as little as 10% deposit plus fees, but this
will mean you incur LMI (which can be added to the home loan but the loan cannot
exceed 90% of the purchase price overall) and it is likely you will also pay a higher
interest rate.

Your deposit may also be required to be in the form of genuine savings to be

accepted by the lender, meaning there needs to be evidence that you have saved
the deposit over a period of time (usually at least 3 months). If you have a larger
deposit you may not be required to prove any genuine savings.

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 What Other Fees Will I Pay?

In addition to your deposit, there will also be other costs involved with purchasing
your home so you need to ensure you have enough savings to cover these as well.
The biggest fee you will pay as a temporary resident is the additional foreign duty,
and this varies depending on which state you are buying your property in.

It is important to note that some states will refund the additional foreign duty if
you get your PR within a certain period of purchasing your property, but again this
is state dependent.

Additional Foreign Duty by State

State Additional Duty Payable Further Information

ACT None Not Available

NSW 8% Click Here

NT None Not Available

SA 7% Click Here

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 State Additional Duty Payable Further Information

QLD 7% Click Here

VIC 8% Click Here

WA 7% Click Here

TAS 8% Click Here

Let’s look at an example of the additional costs you would pay if you were
purchasing a house in NSW for $600,000 as a temporary resident (this does not
include any standard costs such as stamp duty and other fees):

Purchase Price $600,000

Additional Foreign
$48,000
Duty Payable (8%)

FIRB Application
$14,100
Fee

Total $62,100

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Although this looks like a lot of additional funds to pay out, you need to consider
the following factors when making a decision as to whether buying a house on a
temporary visa is right for you as it could still be a worthwhile investment:

How much rent you will be paying between now and when you
anticipate receiving your permanent residency (this will include the
wait time from when you apply for your PR visa).

For example, if you have 3 years until you can apply for your PR visa
and you think it may take 1 year to get the visa, based on a rent of
$600 per week you will have paid $31,200 per year in rent which
over a 4 year period is $124,800

How much the property may increase in value during this time.

Whether you would be likely to build a property or buy a newly

build property when you get PR as you will lose the opportunity to
benefit from any first home buyer grants or schemes.

You will have been paying into your own home loan rather than
someone else’s while you wait for PR so you will have built up
equity and paid down your balance.

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The following are some further costs you should factor in when saving for your
home and these are applicable for both temporary and permanent residents so in
addition to any foreign duty and FIRB application fees:

Stamp duty – you may be eligible for a waiver or

Government concession on the stamp duty as a first home buyer
Charges depending on which state you are buying in (you can check
this using the links in the Grants and Schemes section
above). If not, you will need to allow funds for stamp duty
as this expense cannot be added to your home loan.
Transfer fee
Mortgage registration fee

Lender’s Mortgage Insurance – applicable if you have less

Lender fees and than a 20% deposit and can be a significant cost in the
charges thousands, however this can be added to the home loan if
there is capacity to do so, otherwise it can be paid upfront.
Loan application fee
Legal fees

Conveyancing/Legal fees
Other Building and pest inspection
Costs Moving costs
Home insurance

The fees applicable to you are very specific to your personal situation, so please get
in touch if you would like to know what estimated costs you will need to pay.
You may need to transfer funds from your home country for your purchase if you
have sold a property or just haven’t transferred all of your funds to Australia yet.

I work closely with currency transfer company TorFX who offer highly competitive
rates and no transfer fees. More information on TorFX can be found below, If you
would like a quote or to discuss transferring funds, please click here.

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 Next Steps
So now you know what is involved with buying your first home in Australia, let’s
put a plan into action and get you on the property ladder.

Book an obligation and fee free consultation with me today to discuss your goals,
ascertain your borrowing capacity and calculate the amount of funds you will need
to contribute to the purchase.

I will then let you know if you are ready to buy now or work with you to get to a
position where you will be ready to buy as soon as possible.

Your dream of owning a home in paradise is closer than you think!

Book Consultation
NOW

Abby Suckling
Finance & Mortgage Broker
0477 749 200
abby@diamondlendingsolutions.com.au

(Abby is a credit representative (546600) of BLSSA Pty Ltd

ACN 117 651 730 (Australian Credit Licence 391237)

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Published by Abby Suckling T/A Diamond Lending Solutions (QLD) in Australia May 2023.

The information provided on this site is on the understanding that it is for illustrative and discussion
purposes only. Whilst all care and attention is taken in its preparation, any party seeking to rely on its
content or otherwise should make their own enquiries and research to ensure its relevance to your specific
personal and business requirements and circumstances. All government schemes are subject to specific
qualifying terms and conditions.

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