Getting a mortgage for an international property

There’s an old real estate saying that the three most important factors when buying a property are location, location, location. But what if that location is overseas? Can Australians still get home loans to buy international properties?

Buying an overseas property could offer different opportunities and benefits than what’s available to you in Australia. You could find that an international property is more affordable to you, or is more likely to experience stronger capital growth. Of course, there are also risks and complications involved when buying property overseas that may be different than what you may encounter when buying in Australia.

What do you need to get an overseas home loan? 

Generally, buying property overseas has many similar requirements to buying property in Australia. You’ll likely need to have saved a deposit, and to provide proof of your identity, residence, income, expenses and more to apply for a home loan.

The requirements to get a home loan overseas will depend on the requirements of the local lender, as well as the country’s government. For example, applying for a home loan in Australia often requires proof of Australian citizenship and/or residency, and lenders in other countries may have similar requirements.

Providing proof of your income and expenses may also be more complex if most of these documents come from another country and/or are written in another language. This could make it more challenging to apply for a home loan overseas.

Can you get a home loan for an overseas property from an Australian bank? 

Many of the banks and mortgage lenders that operate in Australia predominantly offer home loans for the Australian market. A few lenders may be willing to finance the purchase of an overseas property, but this may not be an everyday or standard practice. You and/or your mortgage broker may need to sit down with your preferred bank or lender and work out what would be required to get an overseas home loan in Australia.

Alternatively, you could look at applying for a home loan from a bank or mortgage lender that operates in the country where you’re buying. This may mean making some long-distance phone calls or communicating online with the local bank or lender to organise what’s required. You could also send a local representative to contact the lender on your behalf, such as a mortgage broker, buyer’s agent, or legal professional.

Alternatively, if you can find an international bank that operates both in Australia and overseas, they may be in a position to help you with your international property purchase. However, there may only be a small number of these international lenders to choose from, which could leave you with fewer mortgage options available that may be less competitive than you’d like.

What else could affect buying property overseas? 

Just like when travelling and shopping overseas, it’s important to keep exchange rates in mind when considering purchasing overseas property. While sometimes your Australian dollars can go further when buying overseas, the opposite can also be true, which could affect your potential purchasing power.

As well as exchange rates, there may also be extra costs that could eat into your finances, such as international currency conversion fees, as well as government taxes on foreign investment.

If you aren’t able to inspect a property in person before you buy, you may be at higher risk of later having to deal with maintenance issues or even structural defects in the future. And if you’re buying as an investor, managing a property from overseas could also be more challenging. You’ll really need to trust and rely on the real estate agents and/or property managers that are looking after your investment.

You may be able to get help from someone in the area, such as friends or family, to be your eyes and ears when inspecting potential properties. You could also look into contacting an overseas mortgage broker and/or buyer’s agent to help you navigate laws and regulations that you may not be familiar with. A local legal expert could also help you spot any problems in overseas property contracts that could potentially come back to bite you if you’re not careful.

Remember to do your research on any overseas property you’re considering buying, and to conduct thorough background checks on any overseas experts you plan on dealing with on your journey.

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