Are you a New Zealand citizen or permanent resident living in Australia and are looking to apply for a mortgage in Australia?
There can be a bit of confusion when it comes to buying in Australia, and if you are eligible for the First Home Owners Grant…
So today we’re going to go through all of your questions around buying property in Australia and exactly what is involved.
Can I get a home loan in Australia?
How much you are eligible to borrow depends on your personal situation, and also each individual lender and their policies, however as a general rule:
- ✅ The property must be in Australia. We aren’t able to help with buying a house in New Zealand from Australia.
- ✅ If you are living in Australia: As a New Zealand citizen, you will be able to borrow up to 95% of the property value. If you are a non-New Zealand citizen living in Australia on a 461 visa (New Zealand Citizen Family Relationship Visa) you will be eligible to borrow up to 95% of the property value, and may be eligible for the first home owners grant.
- ✅ If you are living in New Zealand: Some lenders will allow you to borrow up to 70% of the property value, but if you are buying in Queensland you will need to pay the Foreign Acquirer Stamp duty which will add 7% on top of the standard stamp duty costs. On a $500,000 purchase, this would mean a total of $52,461 in stamp duty payable (on top of your 30% deposit), more info here.
- ✅ If you are living elsewhere: Up to 70% of the property value, and being a non-resident in Australia you may need to pay a higher rate of stamp duty, in Queensland this is an additional 7% of the property’s value.
What will my interest rates as a New Zealand citizen be like?
If you are not an Australia citizen, your interest rates may vary between each different lenders’ policies, as some lenders charge higher rates. If you are living outside of Australia, this will also affect your interest rates.
Working with a mortgage broker means that you will be able to determine which lender suits your loan needs best and can provide you with the best interest rates.
Another positive thing to note is that usually, we can get you the same interest rates even if you are lending up to 95% of the property value. So if you’re applying with a low deposit then there may be a suitable solution for you.
Do 461 Visa holders qualify for a home loan?
This visa class is for those who are under the New Zealand Citizen Family Relationship (temporary), which allows those who are not ‘New Zealander’ to live and work in Australia for up to five years.
In order to qualify for a home loan, you will need to be part of a ‘family’ with a New Zealand citizen in Australia and be on a temporary Special Category visa (subclass 444) or SCV. A ‘family’ is considered as – you are either married or in a de facto relationship, or you are the child or stepchild of either the New Zealand citizen or their partner.
You will need to have your visa fully approved before you can apply for the home loan and it is best to speak with a qualified advisor around visa requirements.
If both applicants hold a visa the focus will be moved to the 461 visas and often the borrowing capacity for those both on a visa is limited to 70%, yet some lenders will go up to 95%.
What about if I’m a New Zealand citizen wanting to buy in Australia, but I am still living in NZ?
Lucky for you, Australian lenders are mindful of the Australia-New Zealand tie when going through the mortgage process. While it is perceived that if you’re living in Australia you are a lower risk borrower, then if you’re in New Zealand.
Yet if you’re living in Singapore, Hong Kong, the UK or the UAE – this is seen as not having any ties to Australia so it can make the process a little harder. Some lenders will still allow this however it is really a case-by-case basis.
The biggest issue most New Zealand based citizens face is the additional stamp duty payable on purchases in Australia, in Queensland the Additional Foreign Acquirer Duty adds 7% on top of the regular stamp duty payable.
On a $500,000 purchase, this would mean a total of $52,461 in stamp duty payable. In addition to this you will be required to provide a minimum 30% deposit to qualify for a loan.
Read More: Calculate how much stamp duty you will need to pay.
Do I need approval from the government?
If you are a New Zealand citizen and you are looking at buying a standard residential property, you do not need Foreign Investment Review Board (FIRB) approval.
It’s the exact same process for a New Zealand citizen to buy a property in Australia, as an Australian citizen buying a property in Australia and there are no additional taxes.
Speak to our team of experts about this for more information.
What are so many people investing in Australia now?
The history of this situation is that in 2016 the Reserve Bank of New Zealand put a speed limit on banks lending, which has reduced loans that are able to be approved for investors with a low deposit (less than 40%).
Due to this, New Zealand property investors are turning to Australia because they are still able to purchase property with a lower deposit.
Can I buy an investment property?
The good news is yes! As a New Zealand citizen buying in Australia, you are eligible to use your loan for any kind of residential housing, whether you want to live in it or buy it as an investment property.
In the case of commercial loans, this depends on the circumstances so it’s best to seek advice from a mortgage broker (us!) about your personal situation.
Do I have to pay stamp duty?
Stamp duty surcharge was introduced by the government in 2016 specifically for foreigners that are looking to buy property in Australia.
When citizens from New Zealand arrive in Australia they are allowed a Special Category Visa (subclass 444).
If you are on this visa you will be exempt from having to pay stamp duty surcharge which is normally required for New South Wales (NSW), Victoria (VIC), Queensland (QLD), Western Australia (WA), South Australia (SA), the Australian Capital Territory (ACT) and Tasmania (TAS).
However, you’ll need to be aware that in New South Wales you’ll need to be in the country for at least 200 days to avoid this fee. You’re also required to be in the country at the time of settlement and contract signing in order to be eligible to avoid the stamp duty charge. The only state that you can remain outside of Australia at the time of settlement is in the Northern Territory.
To see what the stamp duty costs are, check out our stamp duty calculator.
Non-Residence Withholding Tax
This is a complex situation that we recommend you speak with your accountant about. You’ll need to make sure you either meet the lending criteria otherwise you may be forced to pay the tax.
The tax, in summary, is as follows….
If you were given a normal interest rate of 4.00 % you’ll effectively be paying 4.40% due to the tax. So in certain circumstances, it’s best to make a purchase with a small deposit and refinance to find a lender that meets your criteria to avoid paying the additional tax.
What about the First Home Owners Grant – are New Zealand citizens eligible?
As New Zealand citizens are considered to be permanent residents of Australia they are actually eligible for the grant.
However each state may have some variations like for example, in NSW you’ll need to be living in the country for over 200 days to be able to buy a property and apply for it.
Along with getting the grant, you may be able to also avoid stamp duty if you are a first home buyer.
You could also be eligible for the $15,000 first home buyers grant, take the test here.
Can I use equity to buy a property in Australia (from my property in New Zealand)?
If you’re thinking about using your equity from a property in New Zealand you’ll need to follow this process:
- ❶ First, refinance your mortgage and release the equity in New Zealand – you’ll need to seek guidance specifically from your bank in New Zealand for assistance on this.
- ❷ Next, with your Australian bank or lender, purchase your property with the equity from your property in New Zealand
Some finer details: You will be eligible to borrow up to 60% of the value of your NZ investment property, otherwise up to 80% of the value for your owner-occupied home in New Zealand. Higher borrowing rates may be available however it is subject to your lender.
Can I buy a previously owned property?
As a standard practice, normally foreign citizens are only eligible to purchase new properties in order to comply with Australia legislation.
Yet the good news is, that you are eligible as a New Zealand citizen to buy a new property, existing property and vacant land. So really, you can buy the same as any other Australia can.
Why do we get certain rules as a New Zealand citizen?
As always, it really depends on the bank that you’re working with, which is why it’s important to get a good mortgage broker (like us) to help sort out your situation.
Certain banks actually favour New Zealand citizens due to the joint agreements for legal, trade and residency purposes in their country.
New Zealand also uses VedaScore which is what Australia uses as its chosen credit reporting system too, so the whole process is a lot easier.
You don’t need to be an Australia citizen in order to apply for a home loan in Australia.
What documentation will I need to apply?
To help your application get through in the quickest time frame possible, you’ll need to bring supporting documents like bank statements, payslips and identification. Speak to Hunter Galloway about this in detail and get a free assessment with us today to find out about your personal situation.
What we do is make it simple to get through the home loan process, and with our team of experts, we will help walk you through the process to complete your first home buyers grant application. If you are buying or refinancing your home we can help walk you through the process.
Our service does not cost you anything as we are paid by the lender when your home loan settles.
To chat about your deposit, lending and investment lending options book in a time to sit down with us, or feel free to call on 1300 088 065.
The information on this page is general in nature and should not be considered as advice. Before you act on this information you must seek independent legal and financial advice.