The return of international student arrivals in Australia, particularly in Melbourne, Sydney, and Brisbane following the reopening of borders from COVID-19 two years ago, has sparked increased demand for long-term accommodations suitable for students and their families. Consequently, rental prices around CBD areas and popular universities have risen significantly over this period, prompting numerous enquiries about renting versus purchasing property among international students and their parents.
For international students and their families considering purchasing property in Australia, the first crucial consideration is their eligibility to buy which property. Non-citizens and non-permanent residents typically require Foreign Investment Review Board (FIRB) approval to purchase property in Australia. Generally, they are limited to buying newly constructed dwellings such as apartments, units, townhouses, or purchasing land to build a new home. In contrast, permanent residents have the same purchasing rights as locals/citizens, including the ability to buy an established / 2nd hand property.
Regarding home loan options, the most challenging issue is to find the lender who can accept and verify the income used to repay the loan with. As presumed with most international students and their supporting families’ situation, this income will be derived primarily from overseas. At the moment for non-permanent residents or non-citizens with overseas income, only a limited number of lenders in Australia are able to accept and assess such income.
The type of income also matters, as mostly there are 2 types – salaried or self-employed. In the context of self-employed income from overseas, the lender options that can accept this income are limited even more so, as only a few non-bank lenders are willing to assess this income, either through a full financial report or alternative income verification methods.
Some major banks in Australia advertise that they can consider / accept “overseas income” for loan application, however, this is usually restricted to loans for expatriates (expats) who need to be current permanent resident holders or Australian citizens receiving salaried income overseas equivalent to Australian’s PAYG income. Depending on the individual circumstances, some parents of an international student may be considered an expat and eligible to access this loan option too.
Some non-bank lenders also consider the parents’ overseas income to guarantee the home loans taken by their children (the international student) to purchase a home in Australia. In this scenario, the students own the property in their name, while the income assessed for loan repayments comes from their parents acting as their guarantors. This loan option may cost more at the beginning due to its higher interest rate, but it is particularly useful for families considering the long-term approach. These students may have been planning to get their Australian permanent residency post studies and securing a local employment. In this context, this lending option makes sense, as once the students obtain their permanent residency and a stable employment in Australia, they can refinance their loan with almost any lender, including banks, like locals would – and the property ownership structure is sorted correctly right from the start.
Overall, navigating the home buying process for international students and their families in Australia requires a very careful approach in finding the eligible property to be purchased and getting the right, long term financing structure according to each individual’s situation. Our team at Navanti Finance have been successful now for more than 10 years in helping many international students and their families in achieving this. We are always keeping up to date with the regulations and the emerging lending options in this space to ensure that we can help our clients for a smooth and successful property purchase experience in their new country. Please reach out to us at Navanti Finance, share your plan with us, and we will help you find the best approach to make it happen.
