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No Gunna a non-resident can't get a loan to buy a house without FIRB approval
Topic Started: 7 Aug 2014, 08:52 AM (3,066 Views)
peter fraser
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The question of whether a non-resident can borrow to buy a house without getting FIRB approval has been raised at Macrobusiness.

It's important to establish what category people fit into.

An Australian resident is someone who is either a born or naturalised Australian or someone who has a visa that entitles them to permanent residency.
An expat is an Australian living abroad. Neither expats nor Australian residents require FIRB approval to buy an existing home in Australia.

The people who do require FIRB approval are non-residents who may live abroad or they may live locally but their Visa class does not entitle them to live here permanently. Any foreign national in Australia will have a passport and if they hold a Visa it is stamped into their passport with the Visa type clearly marked, so it's not hard to see who needs FIRB approval and who doesn't.

In any loan application the lender is required to obtain 100 points of ID which must include a photo ID (except in unusual circumstances) That photo ID is usually a copy of the applicants passport, or a local ID such as a drivers licence or an over 18 card. Holding a local drivers licence does not make someone a resident.

Additional ID is required on top of the photo ID - that might be a birth certificate which would answer the nationality question for those born in Australia, but not for those born elsewhere. If there is doubt about an applicants residency status it must be satisfied during the process.

In addition SA and WA have added ID requirements that involve an ID certificate from the Post Office or similar.

It's not a rigorous process but it's quite thorough. Could someone slip through - they might if they could get their solicitor or a JP to falsify an identification document in the absence of photo ID, or the applicant has obtained forged passports and other ID documents - but let's assume that we are not talking about premeditated fraud.

By the time the bank gets to the loan processing stage they know who you are, where you live, where you work, who you work for, and they know whether Australian law requires you to have FIRB approval to buy the house that you are applying for finance for.

Any contract to purchase MUST have a clause "subject to FIRB approval" otherwise even if you subsequently get the FIRB approval it is NOT valid.

If a non-resident does not have the contract drawn correctly and does not get FIRB approval then lenders will not lend to them.

Gunna's remarks are here - http://www.macrobusiness.com.au/2014/08/short-memories-on-asian-property-plunge/#comment-509049
Quote:
 
Not for the first time Peter I find myself wondering about some of the things you suggest to people….I hope nobody was having visions of an ironclad system firmly rebuffing non FIRB approved foreign nationals from getting in some funds from someone here in Australia


I've challenged Gunna to prove otherwise here - http://www.macrobusiness.com.au/2014/08/short-memories-on-asian-property-plunge/#comment-509711

We will see what he comes up with.



Edited by peter fraser, 7 Aug 2014, 09:31 AM.
Any expressed market opinion is my own and is not to be taken as financial advice
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Dr Watson
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Gunna/James/Barista, would you like to respond to Peter's post?
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt — Bertrand Russell
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peter fraser
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Dr Watson
7 Aug 2014, 09:10 AM
Gunna/James/Barista, would you like to respond to Peter's post?
I've sent him a tweet with the link, but it's only fair that we give him time to respond Doc.
Any expressed market opinion is my own and is not to be taken as financial advice
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Strindberg
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peter fraser
7 Aug 2014, 08:52 AM
Any foreign national in Australia will have a passport and if they hold a Visa it is stamped into their passport with the Visa type clearly marked, so it's not hard to see who needs FIRB approval and who doesn't.


This is not true.

I am a permanent resident and a paper visa was in stuck in my foreign passport current at the time my permanent residency was granted. However, that passport is no longer valid - it expired long ago. There is no requirement or means of getting a new permanent residency sticker inserted in my new foreign passport. It is simply not required and there is no requirement for me to retain the expired passport with the stuck in paper visa.

Permanent residents require additional periodically (every 5 years) renewable return visas if they wish at any time to make a journey out of Australia and back again. It used to be that these return visas were stuck in the foreign passport. That is no longer the case. Such visas now exist only in electronic form and have no physical presence in passports.

Australia is now "visa label-free". From the notes included with the grant of my recent return visa:
Quote:
 
Australia is now visa label-free
Australia’s electronic visa system does not require you to have a visa label placed in your
passport. Foreign governments have been informed about Australia’s label-free policy and
airline staff will electronically confirm you have a valid visa before you board the plane to
travel to Australia.

It is now not easy for third parties to see who needs FIRB approval and who doesn't.
Edited by Strindberg, 7 Aug 2014, 09:56 AM.
Housing costs to Income broadly unchanged since 1994 - re-ratified here
The People of Australia have the highest median wealth in the World
2002-2012 10 year house price growth the SLOWEST since 1952-1962
"There are two kinds of people in this world: ones that fiddle around wondering whether a thing's right or wrong and guys like us." (Hugo to Gagin in Ride the Pink Horse)
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Dam
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peter fraser
7 Aug 2014, 08:52 AM
The question of whether a non-resident can borrow to buy a house without getting FIRB approval has been raised at Macrobusiness.

I know two who bought "cash" with a tourist visa, most likely with a Malaysian loan ( with their houses there as collateral).
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peter fraser
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Strindberg
7 Aug 2014, 09:49 AM
This is not true.

I am a permanent resident and a paper visa was in stuck in my foreign passport current at the time my permanent residency was granted. However, that passport is no longer valid - it expired long ago. There is no requirement or means of getting a new permanent residency sticker inserted in my new foreign passport. It is simply not required and there is no requirement for me to retain the expired passport with the stuck in paper visa.

Permanent residents require additional periodically (every 5 years) renewable return visas if they wish at any time to make a journey out of Australia and back again. It used to be that these return visas were stuck in the foreign passport. That is no longer the case. Such visas now exist only in electronic form and have no physical presence in passports.

Australia is now "visa label-free". From the notes included with the grant of my recent return visa:


It is now not easy for third parties to see who needs FIRB approval and who doesn't.
It's still true, most visa holders have it stamped in their passport. If they don't they must produce an official letter confirming that they hold a visa or are entitled to remain permanently. I have seen those cases although not many. Mostly they are in the passport still.

The Visa's generally accepted are 457, 160 to 165 and 188 or a holder who has the phrase "holder permitted to remain in Australia indefinitely" stamped in the passport as part of the Visa stamp.

If an applicant cannot prove that he/she has permanent residency then they can't borrow, the onus is on the applicant to prove that. No proof no loan.

So next time you buy a house you had better have your Visa handy if you want a loan.
Any expressed market opinion is my own and is not to be taken as financial advice
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Strindberg
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peter fraser
7 Aug 2014, 10:21 AM
It's still true, most visa holders have it stamped in their passport. If they don't they must produce an official letter confirming that they hold a visa or are entitled to remain permanently. I have seen those cases although not many. Mostly they are in the passport still.

The Visa's generally accepted are 457, 160 to 165 and 188 or a holder who has the phrase "holder permitted to remain in Australia indefinitely" stamped in the passport as part of the Visa stamp.

If an applicant cannot prove that he/she has permanent residency then they can't borrow, the onus is on the applicant to prove that. No proof no loan.

So next time you buy a house you had better have your Visa handy if you want a loan.
I fail to see how the 100 point id system for loans establishes or is even intended to establish residency status. It is surely intended to establish identity rather than status. Where is the law/regulation requiring banks to establish residency status before lending? Did you make it up?

A birth certificate, even showing birth in Australia, does not establish Australian citizenship or any form of residency status. Children born in Australia after 20 August 1986 are only Australian citizens if at least one parent was an Australian citizen or permanent resident at the time of their birth.

It is quite easy with just a birth certificate and drivers licence to meet the identity requirements for getting a loan.

Permanent residents are foreign nationals and do not even have to hold a current passport from any nation.

The following statement of yours from the OP is, I repeat, false:
Quote:
 
Any foreign national in Australia will have a passport and if they hold a Visa it is stamped into their passport with the Visa type clearly marked, so it's not hard to see who needs FIRB approval and who doesn't.

Very many permanent resident foreign nationals have no passport at all. Passports are only required for leaving and re-entering Australia. Australia policy is anyway now visa label-free.
http://www.immi.gov.au/Help/Pages/Visa-Labels.aspx
Quote:
 
Australia's visa label policy

The Australian Government does not require holders of Australian visas to have a visa label. Visa holders can travel to and reside in Australia without a visa label in their passport.



Housing costs to Income broadly unchanged since 1994 - re-ratified here
The People of Australia have the highest median wealth in the World
2002-2012 10 year house price growth the SLOWEST since 1952-1962
"There are two kinds of people in this world: ones that fiddle around wondering whether a thing's right or wrong and guys like us." (Hugo to Gagin in Ride the Pink Horse)
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peter fraser
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Dam
7 Aug 2014, 10:01 AM
I know two who bought "cash" with a tourist visa, most likely with a Malaysian loan ( with their houses there as collateral).
Yep that would be possible Dam, but in the example you gave the lender wasn't an Australian bank.

BTW how do you know that they didn't have FIRB approval or are you assuming that they just wouldn't bother? It seems dumb to me to not get approval before they buy.
Any expressed market opinion is my own and is not to be taken as financial advice
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Strindberg
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...anyway, I see that gunna has comprehensively destroyed Fraser's assertions with quotes from the AFR, echoice, St George Bank, AAAFinancial etc:
http://www.macrobusiness.com.au/2014/08/short-memories-on-asian-property-plunge/#comment-509049
Quote:
 
Gunnamatta
August 6, 2014 at 8:12 pm

Well not quite the end now is it?

But the upside is there is more than one way to get a margin from a potential borrower regardless of their provenance, nationality or desired asset.

http://www.afr.com/p/business/financial_services/banks_loans_to_foreigners_under_BeMS5UBM9IwpJTSSZWahzI

…and it would appear that these people here are suggesting a mortgage broker may be an appropriate way for non residents to skin that purchasing fetish

http://www.echoice.com.au/articles/2013/11/11/can-non-residents-get-a-home-loan-in-australia/#.U-H-JPmSzOM

Can Non-residents Get a Home Loan in Australia?
Thousands of foreigners buy property in Australia every year. These properties may be purely for investment or may provide temporary Australian residents with a home while they holiday, work or visit the country short-term.

Applying for a home loan as a non-resident of Australia is a little different to the usual home loan application process. Let’s briefly look at some of the complex rules associated with non-resident home loans.

Non-resident Home Loans in Australia
All purchasers of Australian property who are non-residents typically must apply for buying approval with the Foreign Investment Review Board (FIRB). To gain approval you must have a specific property in mind. Therefore, you can sign a contract of sale for a property, but you must stipulate in the contract that the sale is subject to ‘FIRB approval’. It is also recommended that you put ‘subject to finance’ in the contract until you gain home loan approval for the property.

What Property Can a Non-resident Purchase?
Non-residents can buy established property for redevelopment, where an old building is demolished and a new property or properties are built. This type of property can be lived-in or used as an investment property.

Non-residents can also purchase established property for Australian-based staff to reside in, but the property must be sold after the Australian-based staff have finished using the property as accommodation. The property cannot be used as an investment. If a non-resident is seeking to purchase an investment property, they can buy new homes.

What Property Can’t a Non-resident Purchase?
There are restrictions placed on the purchasing of an established property for investment or to reside in, and the purchasing of vacant land. If approval to purchase vacant land is granted, then building on that land must commence within a specified time.

What Types of Non-resident Home Loans are Available?
There are various types of non-resident home loans on offer. These are offered to non-resident’s who come from various locations and who have varying residency statuses and visas. The most common non-residents are those who live outside of Australia, and who wish to invest in property. In this case, most home loan packages that are offered to Australians are available for non-residents. Interest rates and terms are often negotiable. You must, however, reside in a country where the tax legislation makes investing in Australia feasible. Some countries, for instance, have strict withholding taxes and exchange control conditions that can make buying a property in Australia very expensive. Therefore, if you’re a non-resident of Australia you need to check rulings in your country before buying property or before applying for a non-resident home loan.

How Do I Apply for a Non-resident Home Loan?
The easiest way to apply for a non-resident home loan is to contact an Australian home loan or mortgage broker. These home loan brokers specialise in foreign investment, they understand Australian regulations and rulings and they can make the whole process of buying property in Australia as easy as possible.

Want to know more about a non-resident home loan? If so, then contact a non-resident home loan broker today and find out more.

I am actually in an office this eve (in a room chock full of foreign nationals, many of them good friends) with a gent who tells me St George (god bless ‘em) spell it all out nicely on their lending for foreign nationals page

http://www.stgeorge.com.au/personal/home-loans/our-home-loans/specialist/foreign-currency-loan

and he has also pointed out that not anywhere in the checklist they advise foreigners to look at is there mention of FIRB, or any kind of approval they may require

http://www.stgeorge.com.au/resources/sgb/downloads/loans/stg_loanapp_chklist_0810.pdf

…and honorable mention for the boys at Endeavour Financial services

http://endeavourfs.com.au/non-resident-lending.php

who also dont mention FIRB approval, but this paragraph sounds interesting should I ever be in need of purchasing real estate as a non resident

At Endeavour, we are able to assist non resident clients in all aspects of their property purchase, including making contact with Accountants, Financial planners and Solicitors/Conveyances required for the settlement of the property. We have found that this additional service provides overseas investors with the comfort required when purchasing property in Australia and also assists the Endeavour Finance team in the structuring of their finance facilities.

These guys look slick too

http://www.aaafinancial.com.au/welcome/page15.php

Non-Resident Finance for Australian Property –

Australian Property Finance – has never been so easy

Australian Investment Property finance loans for Non-Resident / Oversea’s clients anywhere in the world wanting to purchase property in Australia. AAA have many years experience – not only do we offer the best finance mortgage package – we offer exceptional after settlement customer service to all our clients.

“obtaining Australian property finance has never been so easy for overseas non-resident people ”

FINANCE –

Here at AAA we have many years experience with Non-resident property lending – up to 80% loans available on Australian property, 30 year terms, standard Australian rates, no on-going monthly fees or charges are available on request, internet banking services so that you can access your loan from anyway in the world, re-draw and line of credit facilities available. You can choice what service you require.
Contact our office to find out more and see if you qualify -
Application

Not for the first time Peter I find myself wondering about some of the things you suggest to people….I hope nobody was having visions of an ironclad system firmly rebuffing non FIRB approved foreign nationals from getting in some funds from someone here in Australia
Housing costs to Income broadly unchanged since 1994 - re-ratified here
The People of Australia have the highest median wealth in the World
2002-2012 10 year house price growth the SLOWEST since 1952-1962
"There are two kinds of people in this world: ones that fiddle around wondering whether a thing's right or wrong and guys like us." (Hugo to Gagin in Ride the Pink Horse)
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Dam
Unregistered

peter fraser
7 Aug 2014, 11:10 AM
Yep that would be possible Dam, but in the example you gave the lender wasn't an Australian bank.

BTW how do you know that they didn't have FIRB approval or are you assuming that they just wouldn't bother? It seems dumb to me to not get approval before they buy.
i quite confident they dont even know FIRB exists, and I dont think FIRB allows purchase of existing dwellings from tourists.i know another one with a fresh regional visa who bought one house and one apt, both existing, at melbourne, and of course lives in the house ( not too regional melbourne isnt it ?)
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