There is a lot of confusion amongst the Australian banks and mortgage brokers about whether a non resident can get a mortgage in the first place, let alone whether a no deposit home loan is available using a guarantor. To clear this up, MAP can confirm that non-resident guarantor home loans up to 105% are available to non residents. This means that for an eligible non-resident borrower with an eligible guarantor, a home loan for 100% of the purchase price and enough to cover the costs like stamp duty is available.
This page provides information for when a non resident can get a home loan to buy a home in Australia with no deposit of their own.
What is a Guarantor Home Loan?
A guarantor home loan is where borrowers use the assistance of a relative (generally parents) to arrange a home loan for their purchase. The parents will go guarantor for generally 20% of the purchase price and will either use their home or provide a cash security (term deposit) to secure/guarantee this 20% deposit.
What is a non resident?
For the purposes of this home loan article, a non resident borrower is either a;
1) Foreign citizen living in Australia on a temporary resident visa (ie 457 working visa or spouse visa), or
2) Australian citizens living and working overseas (Australian expats).
To be an eligible borrower the non resident needs to demonstrate;
a) good credit history ideally free from credit defaults however defaults can be accepted providing paid,,
b) good employment history ideally out of any probation period. A probation can be considered on a case by case basis but would generally require some previous experience in a similar position,
c) positive asset position (assets greater than liabilities),
d) income sufficient to afford the repayments, and
e) that the property being purchased and the guarantors property is a regular residential house or unit.
Providing these can be demonstrated the next step is to determine whether the guarantor is acceptable to the bank.
To be an eligible guarantor the guarantor must;
1) be immediately family such as parents or siblings. Guarantors that are cousins or friends are not acceptable,
2) own property in Australia and have sufficient equity in that property,
3) have clean credit history.