Getting a mortgage for an international property

As the old real estate saying goes, 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 to buying in Australia. You may be able to buy a holiday home in a country you love that you can use all year round. An overseas property investment could be more affordable, or more likely to experience stronger capital growth. Of course, there are also risks and complications involved when you buy an international property that may be different to buying in Australia.

What do you need to get an overseas home loan? 

Buying property overseas has many similarities to buying property in Australia. To apply for international mortgage loans, you’ll likely still need to save a deposit and provide proof of your identity, residence, income, expenses and more.

The exact requirements to get an overseas mortgage loan will depend on 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 invest in property abroad.

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 mostly offer home loans for the Australian market. A few Australian 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 a loan to buy property overseas from 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 require making some long-distance phone calls or communicating online with the local bank or lender. 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, when buying property abroad.

Alternatively, if you can find an international bank that operates both in Australia and overseas, they may be able 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 competitive mortgage options available.

What else could affect buying property overseas? 

Just like when travelling and shopping overseas or online, it’s important to keep exchange rates in mind when 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, government taxes on foreign investment, or maintenance and management fees.

If you can’t 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. Alternatively, you may be able to get help from contacts in the area, such as friends or family, to be your eyes and ears when inspecting potential properties.

If you’re not sure how to buy property overseas, you could contact 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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