Off-The-Plan Finance For Expats
Living overseas as an expat can be a fantastic move financially and can allow you to progress up the property ladder quickly. When purchasing off-the-plan property, however, there can be a few additional hurdles to consider when applying for finance.
Living the life of an expat has plenty of benefits. You are generally paid extremely well and in many cases get to live rent-free in some of the most vibrant cities in the world.
On the flip side, for those Australians living and working overseas, the big catch can come when looking to gain finance to buy a property, back home. If you are looking to purchase off-the-plan, this process can be even tougher as it comes with some additional considerations.
If you are going to buy an off-the-plan property, it is well worth taking a few key steps early on in the piece to make sure everything is in order.
Gaining finance: it's a process
When purchasing off-the-plan, it is important for you to have your financial position assessed early. In most instances, there is no subject to finance clause, and if settlement is 1 - 2 years away, there is the potential for market conditions or your personal circumstances to change during this time.
At least four months prior to the anticipated settlement, revisit your application, and make sure your ability to service the loan is still good before deciding who is the most suitable lender.
When the application is submitted and processed, the completed property is valued, loan documents are issued, then settlement can occur.
In terms of LVR - what is required?
For an expat, 80% is the maximum LVR achievable; however, It could potentially be reduced to 70% depending on the lender's policy for using foreign income.
Risks to watch out for
Generally speaking, as an expat, you can get finance if you meet the usual criteria, such as having a good credit history, a stable income and meet serviceability. Issues can occur; however, when you are earning money in a currency that might not be considered as stable as the Aussie Dollar.
For off-the-plan finance, each lender will only finance a certain number of units per development. As an expat your more limited in your choice of lender, therefore it's important to have your application submitted and approved early. You should also arrange for the final valuation to occur on the first day that the valuers are allowed in, to ensure that you are one of the first in line to gain formal approval.
Also, it's important to note that when you purchase an off-the-plan property you pay a 10% deposit, therefore if you cannot settle, your deposit is at risk.
Protect yourself through careful planning
It's sensible planning to ensure that you have a buffer of cash available in case the valuation comes in lower than you had previously anticipated, or at the very least have some equity available in another property, so you can still settle on the purchase.
A great way to get financially ahead
Living the life of an expat can often be a great way to get ahead financially, and it is the perfect opportunity to put some of that additional income to work by investing in property.
If you are well prepared and understand the process, getting finance for an off-the-plan property shouldn't be a problem as an expat.