Australia is one of the countries around the world that has a booming economy. In recent years, however, mortgage for Chinese investors have become difficult to attain. This is because the big banks that usually aid foreign investors pulled out their support due to the massive occurrence of fraud. Fortunately, there are other financial institutions left that are ready to lend, especially to Chinese investors. The question now is: are you suitable for mortgage?
How Can a Foreign Investor Borrow These Days?
Since the rules for property purchase by foreign nationals have become stricter in Australia, lending rules have been fine-tuned in order to make sure that only legitimate buyers can afford it.
- You can borrow up to 70% of the buying price if they want to purchase a new property in the Australia. The interest rate is 6.50% up to 8.00%.
- If you have a high net worth, you can borrow up to 55% at interest rates below 5.00%.
- You may borrow up to 95% if you are a foreign national that is married to an Australian citizen and live in Australia.
- Some lenders and financial institutions will accept 90% of your Yuan income.
- You will need to provide two forms of income confirmation like employment certificate and latest payslips.
How Would an Employed Chinese Investor Get Approved?
In order to get approved, you need to convince the lender or the financial institution that you can repay them in a timely manner. You also need to do the following:
1. Evidence of income
Income is the best way to assure the lender that you are capable of paying them back. Here are some of their specific requirements for borrowing Chinese nationals:
- Submit copies of your recent payslips.
- 3 months’ worth of bank statements that provide information about consistent salary deposits from your employer.
- Employment certificate or letter from your employer stating the nature of your job, the period of your stay in the company, and whether you are working part time or full time.
As of this moment, major banks in Australia are very cautious about accepting foreign currency, particularly Chinese Renminbi, due to frequent fraudulent activities.
However, there are specialist financial institutions that accept Renminbi, usually accepting 60-70% of this particular income for fluctuations in exchange rate. If you want to find such lenders, you would need to hire a mortgage broker as these are very rare.
How Would a Self-Employed Chinese Investor Get Approved?
Chinese businessmen who have business in China usually have a tougher time qualifying for a mortgage. However, this is not entirely impossible, provided that you submit the following requirements:
- 2 years’ worth of Notices of Assessment and business and personal tax returns.
- 6 months’ worth of your business bank statements.
- An accountant’s letter to certify your income.
If your documents are written in Mandarin or Cantonese, you can have expert lending officers or certified translators translate your papers into English. Having a certified translation would be better in the eyes of lenders as this is an official document verifying the accuracy of the translation.
Which Australian Banks Have Stopped Giving Mortgage to Chinese Investors?
Heavy fraudulent incidents are the primary reasons why most banks in Australia have stopped aiding foreign investors. If you are looking for a financial institution that will help you secure a property in Australia, it helps to know that these banks have stopped lending to Chinese investors for quite some time now:
- Commonwealth Bank (CBA)
- Westpac and St. George
- National Australia Bank
- Bankwest, Suncorp, ME Bank, and ING
These banks only take US dollar, Euro, and Great British Pound (GBP) and completely disallowed Chinese Yuan.
Why Did These Financial Institutions Stop Lending to Chinese Investors?
Three years ago, the APRA or Australian Prudential Regulation Authority have stated their worries about how Australian lenders overly-prioritise foreign investors.
The government saw this as a major factor to unmanageable growth in the Australian market, especially for the real estate market. But what really damaged the government's trust is the high number of money laundering incidents involving foreign nationals.
In order to be suitable for home loans, fraudulent investors give financial institutions fake bank statements, fake tax returns and payslips. Some mortgage brokers knowingly allowed this to happen as well.
Since then, banks, real estate agents, and financial institutions have become extra cautious of foreign investors, particularly the Chinese.
Do Foreign Investors Need To Pay Higher Interest Rate?
Since the banks have closed their doors to foreign investors, only a few lenders are left that are willing to risk giving you financial assistance when buying a property in Australia. With this low supply of lenders and the increased risk in lending, the interest rates for loans have also increased.
Do Foreign Investors Need the Government’s Approval?
As always, foreign nationals need to seek the government’s approval, particularly with the FIRB or Foreign Investment Review Board when buying a property in Australia. To learn more about how to get FIRB approval, please refer to our FIRB approval guide.
Talk to a Mortgage Broker
While the Australian government has made it difficult for Chinese investors to secure a loan, it is still possible provided that you submit the essential documents that the lenders require from you.
Talking to a mortgage broker will help you evaluate your situation and help you gather the necessary documents for your loan application.
If you need assistance in locating the perfect mortgage broker, we will be more than happy to assist you. Contact us today.