Changes in lending for foreign investors
In the past six months lenders have made significant changes in their lending policies to overseas investors, meaning it’s becoming increasingly important for Chinese buyers to work with an Australian mortgage broker who can help them navigate the market
One such change was announced by Westpac in October. Many lenders will accept mortgage applications from overseas investors but of the major banks, Westpac is the most widely used.
Westpac announced a change to the application process for foreign investors. Ordinarily, foreign buyers are required to provide two pay slips and one employment letter as proof of an overseas income.
Now, they must provide a three month record of their bank account. What this means is that the bank won’t accept a cash income anymore, it must be deposited into a bank account. This could cause some challenges for Chinese investors in particular, because some Chinese buyers are paid cash or only a proportion of their income is deposited into a bank account.
To overcome this change, Chinese investors must ensure all of their income is deposited into their bank account so that they can provide the correct documentation when going through the application process.
The good news is that home loan products remain the same as what’s offered to Australian residents. The banks usually don’t offer one interest rate to local buyers and another to foreign investors, they generally remain the same no matter what type of buyer they are servicing.
That means as long as a Chinese investor’s application is done properly, getting the right finance for their investment is still possible.