If you are a temporary resident on a Subclass 457 Visa and meet some qualifying criteria then you could cement your move to Australia by buying your own home. Here are the answers to the most common questions I get asked by holders of 457 visas looking to buy their own home in Australia:
Will I need to obtain FIRB approval to purchase a house?
Important changes to the Foreign Investment Framework took effect on 1 December 2015 which now include fees associated with obtaining approval. If you are a Subclass 457 visa holder, you are legally required to submit an application for approval and pay the relevant fee to the Foreign Investment Review Board (FIRB) before the purchase can go unconditional on a contract. Australian Citizens, Australian permanent residency holders and New Zealand (NZ) citizens are exempt from obtaining FIRB approval.
Getting FIRB approval is a straightforward process and usually takes no longer than two weeks from the date the application is lodged. The application can be done online. It is important to note that FIRB permission is granted solely for a specific property unless you apply for an 'established dwelling exemption certificate' which allows you to bid at multiple auctions (valid for 6 months). Check out the FIRB website for more information: http://firb.gov.au
What type of property can I purchase?
Temporary residents holding a 457 visa can buy the following types of property with approval from the FIRB:
Established (Second-Hand) Dwelling: Temporary residents may acquire only one established dwelling and it must be used as their primary residence (home) in Australia. Temporary residents are not permitted to buy established dwellings as investment properties, secondary residences or rent out any part of the property.
New Dwellings: A ‘new dwelling’ is a dwelling which is being purchased directly from a developer and has not been previously occupied for more than 12 months in total. If purchasing a new dwelling from a developer it is important to check if the developer holds a 'new dwelling exemption certificate' which allows them to sell new dwellings to foreign persons. If the exemption certificate covers the intended purchase, you do not need to seek separate foreign investment approval.
Vacant Land: These applications are normally approved by the FIRB subject to conditions (e.g. that ongoing construction begins within 4 years).
Established dwellings for redevelopment: These applications are normally approved by the FIRB provided that the redevelopment genuinely increases the housing stock and certain conditions are met (e.g. that ongoing construction begins within 4 years).
If you obtain permanent residency then any restrictions applied by the FIRB are no longer valid.
How much can I borrow?
How much you can borrow depends on a variety of factors. Firstly, you must have sufficient income to afford the repayments. Secondly, you must have a sufficient deposit to meet the requisite LVR (Loan Value Ratio) that is applicable to your visa.
Typically 457 visa holders may apply for a mortgage for up to 80% of the property value. In other words you would require a 20% deposit plus purchasing costs. Usually purchasing costs (like stamp duty etc.) equate to roughly 5% of the purchase price. Under some circumstances lenders will consider lending up to 90% of the property value.
As a subclass 457 visa holder you should be able to get a mortgage from a standard bank with all the same features offered by other lenders. This can include a redraw facility, an offset account and the facility to make additional payments. There are a vast range of mortgage products available to suit different needs and lifestyles so it pays to shop around for the best deal to suit your situation.
As your local Mortgage Choice home loan expert, I can give you access to a wide choice of lenders, including the major banks. I am very experienced in obtaining loans for temporary residents on Subclass 457 visas, I understand the requirements of the lenders, which will make it quicker and easier for you to obtain your loan. Best of all, there is no charge to you for my home loan service because the lender pays me after your loan settles.
If buying a property is an important step in your plans to make Australia your permanent home, just ‘Ask Andrew’ by completing the contact form at the top right of this page or call on 9401 9244 or 0412 498 872.