Applying for a mortgage on a bridging visa: what you need to know

If you’re considering purchasing property while on a bridging visa, it can be possible to gain mortgage approval, but it may be, understandably, more complicated than if you applied as a permanent resident or citizen.

When you apply for a home loan, lenders are looking for a level of creditworthiness and stability in your finances. A lender may be more likely to offer a mortgage to a borrower who has been employed full-time in a role for at least 12 months for this exact reason. The same is true of your residential status in a country.

While it can be harder for bridging visa holders to gain mortgage approval, it is not impossible. Let’s explore what you need to know about applying for a mortgage on a bridging visa.

Can foreigners purchase property in Australia?

Yes, foreign-born property buyers can purchase a home in Australia, assuming they meet the eligibility criteria set by the lender, as well as additional regulations from the Foreign Investment Review Board (FIRB). You may need to check the FIRB website to determine if you need FIRB approval before you can purchase property.

It’s also worth noting that foreign investors in Australia must pay a fee for each application made, with the cost of the fee determined by the value of the property itself. According to FIRB, for the purchase of residential land: “Fee tiers increase every $1 million of consideration; Fees start at $13,200 for acquisitions of $1 million or less, (c) rising to a maximum of $1,045,000 for acquisitions of more than $40 million”. You may also need to pay a foreign stamp duty surcharge when applying for a mortgage on a bridging visa.

If you are considering purchasing property in a joint application with an Australian citizen or permanent resident, you may be exempt from seeking FIRB approval and paying the costly foreign stamp duty surcharge.

Note – temporary residents holding a 457 visa may also be eligible for a home loan in Australia. They will likely have to follow the same steps listed above.

Which bridging visa holders can apply for a mortgage in Australia?

Bridging visas may be granted for temporary residence depending on your specific circumstances. It can allow you to stay in Australia lawfully while an immigration status is finalised.

There are two types of bridging visa holders that Australian lenders may be more likely to gain loan approval: bridging visa A (BVA) holders or bridging visa B (BVB) holders. Bridging visa C, D or E holders may be approved on an individual basis, and it may be worth speaking to a mortgage broker for more detailed information.

What are lenders looking for in your application?

As mentioned above, a lender is assessing your ability to service a loan responsibly and without risk of default when you apply for a mortgage. There are unique issues that may arise if you are on a bridging visa when it comes to servicing a home loan. For example, if you are unable to work legally, or you are forced to leave Australia, this can increase your likelihood of not meeting your mortgage repayments.

This is why a home loan lender will look at the application of a borrower with a bridging visa with a fine-tooth comb and assess their financial situation and budget for signs of risk. Some of the factors a lender may review in your loan application include:

• Your credit history and credit score
• Your current income and employment status (being a high-level professional may boost your chances of approval, for example)
• The visa you were previously on
• The visa or residential status you’re applying for
• Additional applicants on the application, including partners that are Australian citizens or permanent residents
• Whether you have approval from the Foreign Investment Review Board (FIRB)

While a traditional home loan will involve assessment of your income, employment, and credit file, borrowers on a bridging visa may need to factor in these additional features of their loan application.

Boosting your chances of approval for a mortgage while on a bridging visa

There are some options worth considering if you’re hoping to increase your chance of approval for a mortgage while on a bridging visa. Firstly, if you are married to, or partnered with, an Australian citizen or permanent resident, it could be worth considering making a joint application.

Having a citizen or resident on your application could significantly boost your chances of approval from a lender. Not only that, but you may be able to avoid applying for approval with FIRB, paying application fees to FIRB, or paying foreign stamp duty – which is an additional 8% surcharge in NSW alone.

If this option is not available to you, or if you do not want to risk a personal relationship, it may be worth bolstering your application with additional, positive information. This could mean staying in one full-time role past a probation period of 3-6 months, working on growing your Australian credit history, or even just waiting for your next stage of the immigration process to be completed.

Which mortgages can you apply for with a bridging visa?

Generally speaking, you may be able to apply for any standard home loan while on a bridging visa, including:

• Owner-occupier home loans
• Investor home loans
• Variable rate home loans
• Fixed rate home loans

It is generally recommended that a would-be buyer on a bridging visa saves up a deposit of at least 20% to boost their application for a mortgage. This would mean you are applying for a home loan with a loan-to-value ratio (LVR) of at least 80%. The larger your deposit is, the greater chance you could have for loan approval. Further, you may be more likely to qualify for lower rate or lower fee loans, as lenders often save their most competitive home loans for borrowers with larger deposits.

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