Find out what you need to know about overseas mortgages before looking for your dream house.
Overseas mortgages
June 29th, 2010
It can often be the case that someone wants to buy a property outside Australia. This is perfectly possible, but it must be remembered that it is very different from buying a property within Australia.
There are a number of choices that a home buyer has when buying abroad. The first is whether they get an Australian mortgage or a mortgage in the place where the house is located. This can rely on a number of factors. As they are unlikely to have an income in the country where they are buying then it could be quite hard to get a mortgage overseas, unless the house is likely to be rented for all or most of the time in which case an investment loan is possible in some countries.
If the loan is from an Australian bank then the decision should be whether the loan is going to be in Australian dollars or in a foreign currency. The essential rule should be to match the income with the mortgage, in this way the mortgage will always be payable. Although foreign currency mortgages can be very good when the Australian dollar is rising, as there are fewer dollars needed to make the repayments, they can be financially crippling when the Australian dollar gets weaker. It may often be the case that the foreign currency loan has a lower interest rate than an Australian dollar loan, but this can be far less important than any currency swings, which can increase the size of a loan by a third in a year.
There are two options if using an Australian originated loan. The choice is whether to have an Australian loan that comes from a specialist lender against whether to have a loan from a large bank. Specialist lenders will tend to be cheaper than the big banks, as well as having loans that are better suited for the buyer of overseas property.
Another option is to use existing home equity to either buy the home or to raise the deposit for the home. Extending the loan will often be cheaper than getting a separate loan on the house, as the loan will be in a more competitive market. There are three ways of extending an existing home loan, by increasing an existing loan, by getting a second mortgage or by getting a completely new loan to replace the previous loans.
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Foreign Currency Mortgages, Buying a holiday home, Extending a mortgage, Buying a house when getting a job abroad, Why do mortgages get cheaper the longer you are in the house?Tags: home mortgage, overseas mortgage
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