For expats living abroad and considering purchasing property in Australia, navigating the mortgage and purchase process can be both exciting and challenging. Understanding the essential elements of obtaining a mortgage, working with buyer’s agents, and identifying potential pitfalls is crucial to ensuring a smooth and successful property acquisition.
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I sat down with Martin Zheng of Odin Mortgage and Sky Hammer of Convergence Buyer’s Agents to answer all the common Australian mortgage and home buying questions for expats abroad.
Key topics that we covered:
- Where are the next growth locations for property in Australia?
- Should I purchase for capital growth or cashflow? What are the positives and negatives of both?
- Should I wait 6-12 months to purchase a property to see where interest rates peak?
- How much equity/cash do I need to purchase an investment property?
- Is it possible to refinance a current Australian mortgage whilst living and earning overseas?
- Is it better to keep the property in Aussie citizen name only?
- How to get a mortgage in Oz if I’m not employed and my partner is American?
- Can self employed expats get a mortgage whilst overseas?
- Why should I buy property now rather than wait to see what rates and property prices are doing?
- How to obtain the most suitable mortgage while living abroad?
- How will the rising interest rates affect you?
- How to “cash-out” equity from existing properties to use as a down payment
Mortgages for Expats: Understanding the Requirements and Process
As an expat, securing a mortgage in Australia can be more complex than for local residents, but it is still achievable. Key considerations for expat mortgages include:
- Eligibility: Many Australian lenders offer mortgages to expats, but eligibility criteria may vary. Factors such as your residency status, visa type, employment, and credit history will impact your ability to obtain a mortgage.
- Deposit: Lenders typically require expats to provide a larger deposit compared to local residents, with some requiring a minimum of 20% of the property’s value.
- Interest Rates: Expats may face higher interest rates than local residents due to perceived increased risk. It is crucial to compare rates and terms from multiple lenders to find the best deal.
- Currency Exchange: Fluctuations in currency exchange rates can affect your mortgage repayments. Ensure you have a clear understanding of the potential impact on your finances and consider using a currency specialist to manage your transfers.
Connect with Martin Zheng of Odin Mortgage.
Buyer’s Agents: A Valuable Resource for Expats
Working with a buyer’s agent can be an invaluable resource for expats looking to purchase property in Australia. Key benefits of using a buyer’s agent include:
- Local Expertise: A buyer’s agent can provide you with valuable insights into the local property market, trends, and opportunities, helping you make informed decisions.
- Time Savings: As an expat living abroad, coordinating property searches and negotiations can be time-consuming. A buyer’s agent can streamline the process by shortlisting suitable properties and managing the negotiation process on your behalf.
- Access to Off-Market Properties: Buyer’s agents often have access to off-market properties, which can provide expats with unique investment opportunities.
- Support Through the Process: A buyer’s agent can guide you through the entire purchase process, from property search to settlement, ensuring that you are well-informed and supported every step of the way.
Connect with Sky Hammer of Convergence Buyer’s Agents.
Transcript from our webinar, Buying a House in Australia: Mortgage & Purchase Essentials for expats abroad
Josh Pugh: Hi, everyone! I’m America Josh, and welcome to Buying a House in Australia: Mortgage and Purchase Essentials. This is a question that gets sent through a lot from expats who are living abroad from Australia. And we’ve got two fantastic experts in the field tonight to talk about the implications and the planning that goes into buying a house in Australia from overseas.
So, Martin Zheng of Odin Mortgage and Sky of Convergence Buyers, agents, hello to you both and thank you for joining me tonight! Martin, I’m going to start with you. Do you want to give a quick background into how you’ve gotten involved in the industry, how you’re involved in the market, and a little bit about Odin Mortgage, please?
Martin Zheng: Yeah, well, first of all, thanks for having us. I’ve heard a lot about America Josh through my in New York. They say it’s a great place to meet people and also get a great source of information. So I’m glad to hear it. Yeah. From all the way over in Hong Kong. Yeah. So Odin Mortgage. What do we do? We are an Australian licensed mortgage brokerage.
We only do Australian mortgages for expats and also our foreigners who are living overseas. So unlike your traditional mortgage broker who will usually just refer you to a big four because that’s what people use in Australia and that’s what pretty much 90% of mortgage brokers refer in Australia, we actually look at your financial situation and tailor your recommendation based on your current expat status.
And for any of you who have actually tried to go through that process, you will know that it’s a nightmare, whether it’s to do with KYC, verification of identity, going to the consulate, getting someone to witness documentation, that is actually something that’s very painful if the broker or yourself do not know how to go through that. So because that’s our bread and butter, we actually know all the logistics for people that are living overseas and we know which consulates to go to, who needs to witness what, et cetera.
We also have a tax Arm, so we are able to advice on basic tax structuring questions. We don’t do full tax planning, so if you have tax returns or you want to structure something a bit more complex, you can come speak to us. And we’ll try to keep this webinar predominantly about mortgages. What else? So we have offices in Singapore, in Hong Kong, and we are just starting to launch in New York as well. We have over 15 staff. And last but not least, we’re actually a completely fee free service. So unlike mortgage brokers in the US, where they actually try to charge you for everything, the banks compensate us, so we don’t actually charge you guys anything.
Josh Pugh: Okay, that’s good to know. I feel like there’s a lot of people that have taken a bit of a sigh of relief there. So thank you, Martin, for that introduction. It’s great to meet you. And Odin mortgage and Tax. Sky, what about yourself? Can you tell us a little bit? I will admit I don’t know all that much or I didn’t know all that much about buyer’s agents and where they fit into the process. So do you mind telling us a little bit about your involvement and Convergence buyer’s agents and what you do?
Sky Hammer: Yeah, perfect. Thanks, Josh. And here. Thanks Martin. It’s good to be with you both tonight. My name is Sky Hammer. I’m the co-founder and head of investment at Convergence Buyers Agents. Convergence is an Australian buyer’s agency, so we predominantly focus on Australian expats looking to buy either their future home or their next investment property in Australia. So I guess buyers agents in the US, they’re a bit more common.
So a lot of people do know what buyer’s agents are due to their experience here in the US. But in Australia they’re still a lot less common. So for those that don’t know, a buyer’s agent is very similar to what a selling agent is for a vendor, but we represent the views of the buyers. So that goes from working through a property plan right through to identifying sourcing negotiating property all the way through that process.
We’re one or if not the only, Australian buyers agency that only focuses on Australian expats. So we know the market very well, we know our clients are very busy. There’s a lot to deal with as an Australian living overseas, but throwing in a property purchase as well can sometimes be quite complicated. So, yeah, that’s kind of in a nutshell, that’s us.
Josh Pugh: No, I like it. So as I understand, the two of you complement each other. You’re sort of in adjacent fields that should, in theory, sort of feed and require you go to one to sort out the mortgage and planning side of things, but then you go to the other to actually represent you on the ground when it comes to sort of buying. So this is great.
Martin Zheng: Refer to us as the Dream Team.
Josh Pugh: The Dream Team. I love it! Okay, so we’ve got the Dream Team here. I’ve jumped in the middle. That’s perfect. So to break down for everyone what we’re going to do tonight, we’ve gotten your questions, so thank you for sending them through. We’ve broken them down into some categories. We’ve tried to make this as informative to everyone as possible and we did get some very specific questions that were about sort of tailored to very specific situations and we’ve tried to zoom out a little bit.
We’re going to be starting pretty general about the why would someone get involved in buying a house in Australia in general and then getting more specific about fluctuating currencies and looking at really the nuts and bolts of what’s required if you’re looking to purchase in Australia. That all being said, as Martin touched on, martin can talk to you about tax issues after this. But we’ve tried to stay out of the tax field because it is such a minefield, because so much of it relies on your personal background, your personal story, the situation you’re in.
And we don’t want to be giving you bad advice, so we want to make sure that you’re getting individually tailored advice down the track. After you’ve watched this webinar, take some notes. We will be though; flagging particular parts in our answers or the other guys will be answering questions and saying this is an issue for a tax consultant. So you have your notes, you can write them all down and then go seek that from an accountant. In saying that, also, I want to make sure that we flag we live in the US. So this webinar is intended to provide a basic understanding of how mortgages, home buying and management work between Australia and the US.
And some of these answers may not apply to you. If you want to be sure about your specific situation, please contact Martin and or Sky after this webinar and I will share their details. So don’t worry, you’ll be able to get in touch and seek professional tax advice. So just a disclaimer because I know there’s lots of questions that we got were again very specific and we want to make sure that we’re giving you the best advice.
So we’re going to jump right in. And I thought the best way to start was keeping it really zoomed out. Sky, I’m going to start with you. Why do people get involved in the market in Australia? And one of the questions we did have was around should be purchasing for capital growth or for cash flow? What are the positives and negatives of both?
Sky Hammer: Yeah, it’s a great place to start and that’s obviously one of the questions we get asked the most. Should I buy for capital growth or should I be buying for positive cash flow? For us, there’s two options we can talk through here. One is that there’s obviously buying for capital growth. That’s generally why people buy into the property market if it’s not to buy their own home, it builds generational wealth, it helps set you up for retirement. And that’s obviously one of the kind of key benefits of purchasing property.
So for those clients that we have that have kind of higher incomes, that’s definitely what we’re looking to do. So we’re buying in markets that have 10, 20, 30 years of really good, strong capital growth track records. So that’s probably the most the easiest example to provide there for other clients or for clients with pretty expansive property portfolios. They may be looking to balance those out. So they’re looking in areas and locations where based on their costs that they have to hold the property. They’re looking for positive cash flow, so slightly different to kind of their gearing set up.
So whether they’re positive or negatively geared, but they’re looking for money back in their pocket at the end of the month. So in terms of the positive and negatives of both capital, I guess the larger properties where we’re looking for capital growth, there is a risk that the cost of holding that property over the long term become too much and you look forced to sell those properties. But generally speaking, we wouldn’t put our clients in those kind of situations in terms of the cash flow properties as well.
So positive cash flow properties, they’re great for retirement. So we have a lot of clients that look to buy two, three, four of these over that kind of 5, 10 year period and pay those down over time. But one of the myths that we hear often regarding cash flow positive properties is that they’re all in locations, they’re in mining towns, they’re in locations where you just don’t get capital growth.
And frankly, that’s just not true. So there’s over 200 markets we’re buying in or looking at every one time in Australia. We’re not just looking in Melbourne and Sydney. So we’re a big believer that you can get both capital growth, but also some really good kind of net yields as well.
Josh Pugh: Yeah, awesome. So, Martin, from your perspective, Sky touched on that there’s people buying potentially for investments or potentially to live in the future. Do you get people approaching you for both from overseas?
Martin Zheng: Yeah, definitely! So, obviously we can do both as well. But I think one of the things that people forget is that you can first buy a property as an investment, and then we would help you get an investment mortgage. First rates are usually a little bit higher, but then as you repatriate back to Australia and you either move into that property or when you move into that property, we can actually switch that mortgage from an investment mortgage to an own occupier mortgage. And what that actually means is your repayments come down because the interest rates for own occupier mortgages are actually slightly lower. So, yeah, that’s very common for us. Okay.
Josh Pugh: So they don’t have to make the sort of executive decision right now. They can kind of say, like, I’ve got a strategy, and they can verbalize that to you and say, here’s what we’re kind of thinking about. But you can tailor that to them moving forward.
Martin Zheng: Yeah, correct. So I think one of the great things about Odin mortgage is that we actually try to help our clients structure their mortgages and provide advice over the lifecycle that they’re an expat. So, for example, in Australia, your broker will just be like, this is the best bank, this is the lowest rates, this is where you should go. But for us, if you’re trying to build out a property portfolio or you’re trying to maximize cashbacks or get equity out, we actually take you to the bank that’s most suitable for you both now and two or three years down the track. So we actually think a bit further ahead.
Josh Pugh: Okay. So, yeah, people I know, we got some questions about refinancing. So that is something that they can kind of consider if they’ve got property already or they can kind of plan out. They don’t have to, again, make that decision right at the very beginning that I’m going to move back in two years. It can be something that’s a little bit more fluid than that and they can express that to you.
Martin Zheng: Yeah, correct.
Josh Pugh: Okay, cool. Are Australians when it comes to sort of getting these first? One of the reasons people would get involved is around the first home loan grant. Is that something available to Australian expats?
Martin Zheng: So yes and no. And maybe Sky can also touch on this later. Expats can get it, but not while they are overseas. So what that means is you can buy a property, but then you eventually have to move back into it. And I think the threshold is about a year or you can actually get it when you go back to Australia. So for the first property you buy, if it’s just an investment, you’re probably not going to get it, but when you move back, you actually will be eligible for it. So don’t be afraid that, hey, you’re going to miss out or anything.
The second point to note is these grants are usually only applicable for property purchases. I think the figure now is like sub around 700 to 800K. So if you’re buying anything in the $1 million or $2 million mark, it’s pretty much not a thing for expats.
Josh Pugh: Okay. Sky, is that basically the same as that’s what you’ve seen?
Sky Hammer: Yeah, exactly. And so we have some clients that are returning back to Australia and they know that within twelve months and a lot of them are eligible because they can move in straight away. But if they’re not sure and they’re kind of investing or not moving back for three, five years, then generally we wouldn’t be factoring in those grants.
Josh Pugh: Okay. And Martin, we also had there’s sort of a few different groups of people that might be thinking about buying in Australia. There’s the ones that are buying with potentially a plan to move back, but do you also work with people that are not planning to go back? We’ve had some questions about refinancing and if you’re planning to stay abroad, is that something that you can cover as well?
Martin Zheng: Yeah. So I want to say that we can pretty much help everyone. So we have our credit license and we also have our direct relationships with some of the banks overseas. So for people that do want to move back, we get you an investment mortgage and we switch it to an earn occupied when you get back. For people that are looking at pure investment, we just usually get them an investment mortgage through a pre-approval and yeah, we pretty much can do everything.
Josh Pugh: Okay, cool! I like it. Super! The Dream Team does everything. I love it. And I also wanted to flag; by the way, we do have a Q and A functionality that’s built into our webinar tonight. Feel free to add your questions. I’ll keep an eye on these and I’ll respond to a few writing it out. I know we’ve had a few already come through that are actually going to be answered later in the webinar, so I’ll let you know. But I’ll try and touch on some of these. We’ll try and answer some of these live.
So, yeah, feel free to leave your notes and we can always come back to it. One thing that did get asked was we are recording this webinar, so you can come back to all of these great nuggets of information later on. Sky, if people are starting to put, like, pedal to the metal and actually start thinking about these, what kind of equity and cash do people need to be looking at for an investment property?
Sky Hammer: Yes, that’s a great question. And so it obviously depends on the individual circumstances and kind of what they’re looking to buy. At the moment, we’re seeing a lot of value around that kind of $500,000 mark. So we’re buying kind of across Australia. So taking one of those $500,000, I guess purchases, we generally recommend taking on like a 20% deposit. So 80% LVR, and I guess Martin can expand on that shortly, but that’s to get the better rates and what we’re seeing.
But in that case, you’d be looking at, say, $100,000 deposit, and generally we advise another maybe 5% to 6% in additional costs. So we’re talking about stamp duty, we’re talking about, obviously a buyer’s agent fee, conveyances, solicitors, building and pests, that type of thing. So generally that’s kind of ballpark figure moving up to, say, a million dollar purchase. Again, you’re looking for essentially double those amounts. So, yeah, looking more in the 200K plus mark.
Josh Pugh: Okay, cool. And Martin from your Sky just introduced that. So if you’re someone overseas, how do the banks look at an overseas salary? So are they looking at it in the same way that they look at someone in Australia?
Martin Zheng: Yeah. So not quite what the differences are. They’ll shade your income, and what that means is they’ll put a haircut on your income, usually around 20%, and that’s to account for foreign currency. So there’s that element of it. And then the more important element is the bank’s individual credit policies. So some banks treat your income differently. So, for example, some banks won’t take commission income. Some banks won’t even let you use your bonus income. So I know a lot of people in the US. If you’re working for a bank or a tech company, you have a lot of vested shares or ESOP or things like that.
If you go to the wrong bank and that forms a significant portion of your all in comp, then if you’re not allowed to use that, you won’t be able to borrow as much. So we’ve had people who are on good money, they go to their friends who are a broker in Australia or they go direct to the bank in Australia when they make a trip to Australia and the bank will tell them that they can only borrow 300K. You’re not buying anything in Australia with a 300K mortgage unless maybe you go to some of the more rural areas. But then they come to us and we’re actually able to get them borrowing of close to a million dollars.
And the reason for that is because we understand each of the different policies at each of the different banks. So you really need to know which bank to go to. Now of course, you can do this all yourself. You can individually call up every bank or 40 banks in Australia and then go through the application process, see which one will actually give you the most borrowing. Or you can come to us because we’ve actually served like hundreds of clients who have gone through this process.
So for example, another very interesting policy decision is some banks won’t actually let you refinance and they won’t let you cash out. So instead of having to pay 200 or three hundred K of equity like Sky just mentioned, you can actually cash out of your existing investment property if you had one. And therefore the policies actually play a big part in this.
Josh Pugh: Okay, I know you may have already touched on this and I will admit that some of the acronyms get me, but the loan to value ratios and things is that sort of expanded on as well for expats differently than Australians?
Martin Zheng: Right. So the LDI is generally the same across the board. It’s around 80%. One thing that Aussies may be familiar with is lenders mortgage insurance, which is LMI, which actually allows you to go up to 95%. But actually most expats can’t get that. Usually it’s only 80%. Some rare cases you can get LMI, but it’s usually quite rare. But I think what you should actually consider is 80% is possible, but you may not be able to get it because your income, after all the discounting and policies won’t actually get to the 90% or 80%.
So for example, some people like to bring in their spouse or their partner and use their income as well. And if you use two people’s income, you can usually get to 80%. But then the question is which banks will take both people’s incomes? So you really have to find the right bank.
Josh Pugh: Okay, we had a question around actually, Sky, first. Somebody asked the $500,000 you were talking about, was that an Australian or US Dollars?
Sky Hammer: Yeah, correct. And I was going to answer that one. So anything that we speak about from the buying side and the property value side, we’re talking Australian dollars, which again, is obviously more favorable given most people on this call are probably using USD.
Josh Pugh: Yeah, awesome! And Martin, we had another question around. If somebody’s only been here for, say, two or three years, does that make a difference when it comes to looking at sort of this overseas income compared to someone that might have been in the US for five to ten years? Is there a contrast for that?
Martin Zheng: Yeah, so the sweet spot is usually around two years. Banks want to see you have stability in your job. And the other great thing about the two year mark is banks actually use the average of your last two years bonus. So if you’ve only had one year’s of bonus, if you get a bonus, then they’ll only take 50% of that. But whereas if you’ve had two years of bonus, they’ll take the average of the two. So that actually bumps up your borrowing power by a lot.
Josh Pugh: Okay, awesome. And do you work with only Australian lenders? I know, we just had a question around, like, do you work with us lenders or is it all Australian lenders?
Martin Zheng: Yeah, so I would say more than 90% of our stuff goes back to Australia. And the reason why we want to do this is because we want to actually match the asset and the liability, so there’s less risk for you there. So we want to give you a mortgage back in Australia and with the asset in Australia as well, so the rental income can actually cover the mortgage repayments as well. Your FX is matched your liabilities and the asset in the same place.
In saying that, though, we do have overseas lenders, but generally speaking, they’re a little bit more expensive and they don’t come with some of the great features of the Australian banks, such as your Redraw and your offset account. And as soon as you’re borrowing from overseas as well, you then start to run into extra tax complications and other considerations when you’re borrowing overseas. So generally speaking, that’s not something that we advise people do, but obviously, if the client feels very strongly about doing that, we usually do try to assist.
Josh Pugh: Okay, cool. And Sky, we had some questions. We’re obviously looking at the buying place, but we had some people get in touch and ask questions and we don’t want to go into too much depth, but around capital gains and selling houses. So is that something that you get into as well?
Sky Hammer: Not particularly. So on the selling side, obviously you’d use a selling agent. But again, those capital gains questions are generally best placed for the, I guess, accountant. We do have accountants within our team that obviously don’t work for us, but we can definitely put our clients in contact with someone that can provide that advice.
Josh Pugh: Okay, awesome. And by the way, guys, if you do see Martin and Sky, if you do see some of the questions coming in, feel free to answer them. Push Answer Live and I’ll call you on them because I’m now seeing some acronyms coming in that I don’t know if I’m going to understand, but if we’re looking at taking the first step so somebody is kind of committed to this now. They’re a bit excited, obviously. There’s the two of you, the Dream Team. Who acts first? Martin? Is it sort of someone goes to you first to start the ball rolling if they’re really starting to think about investing in the market.
Martin Zheng: Yeah, so I think from my perspective, the mortgage always comes first and that not only gives you peace of mind, but actually protects you from a lot of the risk. So what the process usually looks like is you come to us, get a pre-approval, we tell you exactly how much you can borrow, and we confirm that with the bank. We submit an application for you to the bank, which actually doesn’t cost any money. It takes a little bit of time and it’s actually a little bit tedious because you have to upload a lot of documentation.
Once we get all that, we submit it to the bank and the bank confirms how much you can borrow and they issue you something called a pre-approval. And basically all a pre-approval is just a letter from the bank saying if your circumstances don’t change, then this is how much we will lend you on an indicative basis based on today’s interest rates.
And then you basically have this letter, which you can then go to Sky and his team and say, hey, look, this is how much we can borrow, and this is our kind of target sweet spot, and can you help us find anything? And then we pass you over to Sky. And then Sky maybe Sky can talk about.
Josh Pugh: Yes. So they’ve gone to Martin, they’ve got that pre approval, and then over to you when people arrive at your door. So if they’ve been recommended by someone like Martin to come and approach you, what are they coming within their hands? What are they ready with? What are they planning?
Sky Hammer: Yeah, that’s a great question. And just to touch on what Martin was saying, generally we have a lot of kind of potential clients reach out and one of the first questions we asked is, are you pre-approved or are you speaking to a mortgage broker? Because at the end of the day, I don’t want to waste our potential clients time if they haven’t got that kind of sorted. But we can’t really help them if we don’t know what their kind of purchasing power is.
So, generally speaking, if we have someone come to us with a pre-approval, we’ll sit down with them and work through what their kind of priorities are and what their property plan is. Some clients particularly kind of gets the older expats. They kind of know what they want. And so that’s a lot easier for us. But generally, and I’d say particularly since post COVID, so there’s a lot of built up equity in homes in Australia. Australian expats are realizing that they’re looking to do an equity release and purchase probably their first investment property.
So we’ll sit down with them and work out what that looks like, as is the nature. As an Australian expat, I’ve lived overseas for many years, I know exactly how this feels. But what a lot of clients look to do is purchase a property that is both an investment, but they can also see themselves living in. And from our perspective, that’s not the kind of ideal investment you should either be buying for investment or you should be buying as a house to live in.
So a lot of the time it’s working through that process. Then once we’ve worked through that, we’re going back to those initial questions we spoke about and that was, are we looking for capital growth in this purchase? Our answer is we’re always looking for capital growth, but are we trying to balance that with some pretty generous yields as well? And then we kind of work through those questions as a team.
Martin Zheng: Sorry, was the risk in not having a pre-approval? Is that let’s say you’re earning really good money, right, and you think you can borrow a million dollars to buy a property and it should be all fine. And then what happens is you go through the process and the banks pick up on some random little thing. Like, let’s say you missed A credit card payment in the past when you Were in Australia. Or you can’t get The VOI or The KYC done, so opening up bank accounts and for whatever reason, you’ve already signed the contract and the sellers are expecting to settle, but you actually can’t get your financing. In the worst case scenario, you lose your deposit, right?
So my tip from the mortgage side is get a pre-approval, but then I think Sky can probably talk to something called a subject to finance, right? So you have a cooling off period and things like that, which can actually really protect you from the risk of losing your deposit.
Josh Pugh: Sky, do you want to touch on that?
Sky Hammer: Yeah, definitely. And as part of our process, we’re obviously negotiating price, but we’re also negotiating terms of settlement. So for expats, we generally try and extend that kind of finance clause. And some days, if you’re an Australian living in Australia, you might do a 14 day finance clause and that can be enough for a bank to kind of process and give you kind of full finance approval. But for Aussie expats, we look to extend that clause and we do that for most clients. Again, I guess if you’re an individual trying to buy a property in Australia from overseas, it is a lot harder. And we felt this personally.
Like years ago when we were building our own portfolio, where I guess your offer that you put to someone, you’re delaying this kind of settlement process in the finance, it’s not as competitive in that market. So we rely heavily on our agent relationship. So the selling agents know that when we’re coming with someone, it’s not kind of a wish list of a property that someone’s looking to buy. They’re kind of verified, they’re validated, they’ve got preapproval in place, and it kind of adds some weight to those offers.
Josh Pugh: Yeah, great! I think it’s really good looking at all of this as a big picture, moving back to Australia or moving to Australia is going to be incredibly difficult. There’s going to be a lot to consider, and there’s a lot of things that we don’t realize are going to be quite difficult when you get there. So having someone like yourself Sky and having already spoken to Martin, it gives you sort of the ammo to say, I am legit, even though I’m geographically located a long way away. Martin, we had a couple of questions around the pre approvals. Two things, how long are they valid for? And secondly, are they valid state by state or are they nationwide?
Martin Zheng: So the first question, how long they’re valid for? Generally speaking, they’re valid for three months, but depending on the bank, you can actually do a refresh. So let’s say you provide 100% of the documents, you get pre-approved, and then three months goes past and you haven’t found anything. What you can actually do is you can just submit like a light refresh of the documents, and then the banks will extend that pre approval for you for another three months. So that’s the first question.
And then the second question was, are they state by state, generally speaking, preapprovals? I wouldn’t say they’re state by state, but when you submit an application, usually the bank asks you, where are you looking to purchase? And generally speaking, that is also how they determine the rental yield. So it’s not really but you can always change. So let’s say you submit and you said you wanted to buy something in Sydney, you can always change your mind and say, oh, actually, I found something in Melbourne, and now just redo the calculation. So I guess the answer is it’s not state by state.
Josh Pugh: Okay. So, Martin, generally when we’re looking at the best and effectively the most suitable mortgage for an expat, what are the kind of checklist things that people are going through? What are you thinking about on their behalf?
Martin Zheng: So with mortgages, it’s really just a commodity product, right? There’s nothing too fancy about different types of mortgages. As I mentioned before, for a mortgage for an expat, it’s way more about the policies, making sure you find the right policy for your situation and getting if it’s your goal to get the maximum borrowing that you can get at the cheapest rate. There’s not really a checklist because all the mortgages in Australia are generally the same. You’ll get an offset account. It’s either investment or it’s owner occupier. Yeah. It’s really about the policies. And like I said, you can either go to the banks yourself and figure out the policy, or you can come to us. And we’ve already got a Wikipedia of all the different policies for all the different banks. Yeah.
Josh Pugh: Okay. So again, I think you touched on this earlier. I think it’s a great point. All of these things can, in theory, be managed by an individual. If they really want to, they could go down the list and build out their own Wikipedia entries. And I sort of say this for both of you. There is nothing stopping people from doing it. It’s just that having the two of you in your corner means that the whole process becomes a whole lot less stressful, I guess.
Martin Zheng: Yeah. And I think one other thing about the pre-approval process that I want to mention is we also get kind of like some indication, both me and Sky, of how the market is reacting on the ground. So I think the general kind of gist of people who are looking to buy property is they want to kind of take a wait and see approach, right? Wait until the property market turns, wait until interest rates stop going up. But there’s nothing stopping you from getting at least a pre-approval because, again, the preapproval doesn’t cost you anything and it confirms how much you can borrow.
But one very interesting kind of insight is when you think the market has turned or the interest rates have stopped going up, that’s when you start to get an influx of people coming into the property market, right. So guy can probably talk about property prices. You’ve usually missed it. But from the preapproval side, when everybody is trying to get a pre-approval, that time that takes the time it takes to get approval goes from three or four weeks for an expat to like two months.
So if you can’t even get a preapproval in two months, you’ve definitely missed the bottom of the market if you’re trying to time the market. So we always recommend just get your pre approval even if you’re not using it, just have it there, refresh it when you’re ready to pull the trigger. You’re way ahead of everybody else.
Josh Pugh: Yeah, nice. Sky, I think you might have touched on this briefly when you were talking about sort of the overall budgets and money to have, but we just had a couple of clarifications. What is the general fees for a buying agent? What kind of fees could people looking for working?
Sky Hammer: Yeah, good question. And so, generally speaking, on the lower end, I start at the kind of $10,000 mark, working up to a percentage fixed fee, kind of depending on the property that’s purchased.
Josh Pugh: Okay. So again, it’s a variable rate depending on what exactly is involved. So Sky, if someone’s come to we had a few people that said, I don’t know when I’m going to move. I don’t have a strict sort of structure about what I’m going to do. Are there strategies for when and where they should invest? Do you look across the whole country? If they’re looking to invest in something, are you able to sort of say, like, yeah, we can pick some locations, or what’s the deal there?
Sky Hammer: Yeah, definitely. We’re a data driven buyers agency, so where we’re buying today isn’t necessarily where we’re buying in 6 months time, 6-12 months time, we spend thousands of dollars a month on as most up to date data as we can get our hands on from a range of providers. So that’s definitely kind of how we operate. So strictly for investment, we’ll sit down with our clients, talk through, I guess, obviously their capacity and what kind of type of property they’re buying.
And from there, that’s when we’ll identify two or three locations and say, based on what you provided us, these are the locations we’re buying in right now. We might not choose one location, we might look to buy in three and just see what we identify in that kind of time frame. And again, that’s kind of how it generally plays out.
Josh Pugh: Okay, awesome. Martin we’ve had a few questions come through around. Just looking at your general finances as an expat, do you want to touch on how credit cards work, how much salary, how many salary statements? Like, how do you build a profile of what someone looks like when they’re living overseas?
Martin Zheng: Yeah, so I think, look, generally speaking, I wouldn’t say you would change your financial situation to get a mortgage because. We should be presenting….
Josh Pugh: Sorry, not change to present.
Martin Zheng: Yeah, sure. Present. So I think just on a very high level, it’s income what you make minus your expenses, and the banks do this weird thing, which is minus your potential liabilities. And that’s where the credit cards come in. And then you have the free cash flow that is available to service the loan. So I saw a quick few questions on credit card. Yeah, this is a big one. When you go to a bank and you have a large credit limit, the banks will say you have a potential to draw that down.
Therefore we’ll add that into your borrowing power, which you can argue it makes sense or it doesn’t make sense. We won’t debate that. But basically how you maximize your borrowing power is you reduce those credit card limits. So you either reduce it down to the minimum that you can get the mortgage and then you can move it back up. Assuming you’re not going to actually use it and put yourself in a very negative financial position. But I know in the US, that a high credit limit is actually better for things. But in Australia, in terms of getting a mortgage, it’s actually worse.
So what you want to do is you want to reduce those credit cards when you’re getting a mortgage and then move them back up later for the purposes of having a higher credit limit. And then for the salary statements, yes, it is very dependent on the bank. I would say, generally speaking, it’s three months. If someone is telling you six months, I’m not quite sure which bank that would be.
Most of the banks that we use is three months. Unless you’re on commission income or you have a lot of volatility on your income, like, let’s say you’re earning, you’re an insurance broker or you’re some other type of broker where your salary or your wages or your all income is very different month to month, then the bank will ask, hey, can you show me six months? And I’ll flatten it out, smoothen it out for you. But if you’re just a regular PAYG employee, usually it’s three months.
Josh Pugh: Okay, awesome. And Sky, I just saw a question coming around, like buying a place or investing in a place that you may want to live in down the road. Do you want to just retouch on that?
Sky Hammer: Yeah, sure, happy to touch on that. So an example where you’re looking to purchase a house that you want to live in down the track. What we do is actually, we’d look to identify that exact type of property you want to live in and during that kind of holding period. We’d agree that, look, maybe it’s not the best investment, but we’re considering this an owner occupied purchase. There’s a comment in there regarding capital gains tax rates for non-residents. Again, that is, I guess, on the sale of that property.
If you’re still obviously living overseas and a non-Australian resident, again, speak to your accountant. But, yes, there is an additional tax. From our perspective, though, we’d be asking why you were selling that property on track. We’re strong believers in a buy and hold strategy. What we’d be looking to do is to draw out that equity, speaking to Martin and his team and then looking to purchase again after that. So there’s obviously other reasons people look to sell, but for us, that additional tax isn’t kind of factored in for most purchases.
Josh Pugh: Okay, awesome. And Sky, I know some people, like a lot of people, will go back and forth between Australia and the US. Just for vacations or planning to see family and all sorts of things. Is there an advantage to them on your behalf being in Australia? Or is the whole point of the buying agent is that all about not having to be in Australia?
Sky Hammer: Yeah, I guess as an Australian buyers agency, focus on expats. We’re here to do that entire process for them. We’ve done it for plenty of people. We have heard actually quite a few horror stories in that space. So the most common being, I want to buy a house. I’m going to take a three or four week holiday back to Australia, and in that time, I’m going to buy a property. Usually they attend some options.
Week one, maybe don’t get anything. Week two, they get a bit more desperate, and then week three, they end up buying an inferior property that’s non-investment grade. It’s not what they wanted. It’s on a main road and that type of thing. So working with us, I guess, in advance or over kind of an extended period, we’re trying to avoid those scenarios.
Josh Pugh: Okay.And Martin, it’s the same when it comes to sort of the benefit of applying through someone like yourself. The idea is that you’re building a profile as an expat, as opposed to trying to be sort of a transitional Australian that doesn’t have a good history because they’ve been overseas. Is it confusing for some lenders?
Martin Zheng: Yeah, pretty much. So, surprisingly, some of the banks don’t even really understand the expat profile. So for some of the bank processes, they’ve been living in Australia for 40 years. They’re like, oh, expats, I didn’t know that. They paid more or less tax. They have a property overseas. Can we use that income? The banks processors don’t even have as much experience as we do with expat loans.
So what we do on some application is we write the story and the narrative through what we call broken notes, and then we actually present the case to the bank assessor and actually it makes a lot more sense to them and we actually sometimes educate them on their own policies. And sometimes we’ll debate them for you. So one really cool example of this is let’s just say you went to a bank and you submitting the application based on what we told you, and then the bank assessor doesn’t know what they’re doing, and they come back to you and say, actually, you can’t do this.
As a broker that knows what they’re doing, we can actually challenge them and say, actually, look, if you refer to this page in this section of your credit policy, you actually can do this. And actually, that’s something that we’re able to do.
Josh Pugh: Okay, cool! Yeah. So it’s really both of you can kind of advocate on behalf of being an expat Australian on that. Martin, we were talking a lot of the people watching will be the expat from Australia, but a lot of people we had a lot of questions coming in around the idea of US partners. So people might have a partner who is a US citizen. What are the considerations that they need to make when it comes to applying for a mortgage through you? And are there benefits to one of the people owning it? Like the expat owning it alone? Or how does that situation work for you when you’re presenting that case?
Martin Zheng: Yeah, so I think just very briefly on the stamp duty and kind of tax perspective. Stamp duty perspective is if you’re buying a property in only the Australian citizens names, you actually pay less stamp duty or less tax. If you’re trying to bring a US partner on, you actually have to go through something called the FIRB, which is Foreign Investment Review Board, and you actually have to pay a bit more stamp duty as a foreigner if you have a US partner.
So generally speaking, if you want to maximize savings, you would buy in the Australian citizen’s name, but then you got to consider what are the potential implications of that going down the line in the future if the property is only in one person’s name. Some other things you might want to consider are let’s just say you earn only what is it like? Let’s just say you earn 100K USD per year and you can get a let’s just call it 300K mortgage or 400K mortgage. If you have a partner and you add them onto the mortgage application, you can actually double your borrowing. But again, you have to know which bank will accept a foreign applicant’s income.
So let’s say, for example, you take them to one of the big four and they actually turn down the foreigners income. Then you actually can’t borrow as much as you thought you were going to be able to borrow. Whereas if you went to a bank like, let’s say, Banquest, they will actually take on the foreigners income as well, and therefore you’ve immediately doubled your borrowing capacity.
Josh Pugh: Okay. Yeah. So it really is like it’s an important consideration. You shouldn’t just jump in. Like adding the two together feels like it would be just the easier way, but it’s not always the case.
Martin Zheng: Yeah.
Josh Pugh: Okay, cool. Looking forward. I know we had a lot of questions around the idea of what should I do? Sky, I’ll start with you. Do you have particular advice for people building out these timelines? And I know this is a really good flag for I actually did a tax webinar a couple of months ago and talked about the timing for moving is important when it comes to tax.
So it’s something to consider as part of a year about when you should move throughout the year to make sure that you’re taking advantage of the tax situation when you’re moving. But for someone who doesn’t know whether they’re going to buy now or should they wait six months, should they wait twelve months, what are the markets doing? Sky, what’s your feedback and what’s your response to that kind of question?
Sky Hammer: Yeah, and it’s one of the most common questions we get, that’s for sure. And so for a lot of people, I guess there’s the overarching phrase, it’s time in the market, not timing the market. For us, we actually think it’s both and we can talk through it in a bit more detail, but for those kind of following the Australian property market, the media has turned, and by no means do I use the media as a checkbox for which way the market’s going, but what that has a huge effect on sentiment.
So this webinar is actually perfectly timed. So for those that kind of follow any core logic or prop track data, we have started seeing some price increases across Australia. So Sydney’s return to positive growth, Melbourne, Brisbane and others are trending that way as well. I wouldn’t recommend this to most people, but we actually track daily price movements on some of this data.
So, again, unless you’re a property enthusiast, I’d spend your time doing other things. But we’re tracking the numbers for April and again, it looks like Sydney will do another 1% this month. So we’re talking 12% annualized if we kind of project that out, which I think it’ll be a bit less than that, but Melbourne, Brisbane and other cities are doing the same thing. So we really like quite a few markets at the moment. We’re buying across Queensland.
So we’re not talking just about kind of Brisbane sunshine coast, gold coast? There’s some really good regional Queensland cities, and we’re talking about big cities like the Toowoomba, Townsville, even Bundaberg to a lesser extent, but those that have diversified economies and really strong growth drivers.
Martin Zheng: Okay, this one again. So I want to stress I don’t usually like to predict property prices and when the market is going to turn and things like that, but what I can say is when you start hearing about property prices having turned from your friends and family and in the news, it’s usually already too late, because ships the ship is sailed. And then you come to me for pre-approval with everyone else. That takes another two months. It has really sailed by then.
Josh Pugh: Martin, I’m getting the feeling that you think preapprovals are really what people should be getting right into right away. So, Martin, in general, what’s the sort of situation that people should be thinking about? What should they be considering when they’re looking at, should I get involved now? Should I be waiting? What kind of factors are you telling people to consider? I realize, so putting aside the crystal ball and not actually predicting what the market is, what are the things that people should be considering about their own situations?
Martin Zheng: Yeah, I think instead of trying to time the property market, I think one thing that expats often fail to consider is playing around the expat lifecycle and timing the expat lifecycle. And what I mean by that is a lot of expats come over to the US because there’s better job opportunities and they’re making better money. So when you’re over here, if you’re making better money while the US dollar is strong, it’s actually the perfect time to use that stronger currency and that stronger kind of salary to look to invest in in Australia, right?
If you’re earning like 1.5X-2X, what you’re actually making in Australia, it’s not even really about timing the market, right? It’s about timing your kind of job to be able to maximize your borrowing, to get kind of that dream home that you want to get. So a lot of the times, the people with the fancy homes back in Australia, it might not be because they make more money, it’s just because they’ve been able to kind of utilize that expat status, borrow more and get that dream home. Now, I want to caveat that with you shouldn’t borrow more than you can actually repay when you go back to Australia. So that could be quite dangerous.
So we have calculators on our website. If you know you’re going to be going back to Australia and your income is going to be halved, you want to make sure you can make those repayments. But if you can’t, then I would say, yeah, go for it. Why not have that dream home that it’s so much harder for everybody else to achieve? If you’re unfortunately making Australian dollars back at home and you have to pay down hex, you have to pay Medicare, when all those start to add in your borrowing power, you’ve kind of missed the boat on leveraging that expat status.
Josh Pugh: Okay. Yeah. So it really is about using the advantages that you’ve got but then timing it out practically. And I like the idea that you’ve got some calendars, you’ve got some calculators that can sort of take all of those considerations in because I would dare say you’d get a lot of people that would approach you and not really think about all of the moving pieces when they’re planning.
Martin Zheng: One other point I would add to that is kind of there’s this other thing called accommodation limbo, right? So what I mean by that is if you don’t purchase while you’re overseas, you got to think about what does that look like logistically when you move back, right, are you going to be moving back in with your parents? Are you going to move into a hotel? Are you going to move into an Airbnb for three months? Where are you actually going to stay when you move back to Australia?
And when you move back to Australia, if you have a new job, the bank’s going to say, well, I want to see that you’ve been in this job for three months. I want to see that you have stability in this job and therefore you are at least in rental or with your parents for another three months. And whatever else might change during that three months, you may have to start all over again. So it’s actually a bit more safe to do it while you’re in the States as an expat because you actually have stability for the past two years.
Josh Pugh: Okay. Yeah. And that three months mark is really the sort of and I know you touched on this before, but that three months, mark is really what people, what the banks and lenders want to see as stability, ability, that’s their litmus test.
Martin Zheng: Correct.
Josh Pugh: Okay. Sky, when it comes to comparing, we had a few questions around the comparing houses and apartments. Again, we don’t want to make that we know exactly what the market is going to do, but what’s the difference for people who are considering moving back to Australia and comparing those two markets of houses and apartments?
Sky Hammer: Yeah. And I guess maybe just to speak historically quickly, obviously during the boom through COVID-19, freestanding houses kind of well and truly outperformed, I guess, units in most markets, if not all, we have seen that shift slightly. So as interest rates have risen, obviously borrowing capacities have reduced and it’s pushed a lot of people that were looking at freestanding homes down into townhouses and that unit market. So there has been some reasonably strong growth in that townhouse and unit market over the last year or so.
But generally speaking for us, we have strong believers in freestanding houses for investment purposes, for owner occupied purchases. We definitely buy units. We buy townhouses in specific suburbs for our clients. But generally speaking, if we’re looking as an investment, we’re buying in that housing market and not just in one market, but obviously across the country, depending on where we think the best purchase is at that point in time.
Josh Pugh: Okay. Yeah. So, yeah, you’re looking from the whole country. Someone can come to you and say, I’m open to sort of investing anywhere in any state. And that’s something that you can really advise on about strategy for them.
Sky Hammer: Yeah. And in terms of the crystal ball comment as well, and Martin will be seeing similar things at the moment, but we are seeing increases in inquiries. Everyone’s getting comfortable with the kind of level of where obviously the interest rates are heading, where they’re at the moment. We’re not crystal ball gazing.
We’re not trying to say how many one or two interest rate rises still to come. I know I think there’s a good track record to show now that the RBA doesn’t know which way it’s going to go. So we’re not going to pretend we’re like we’re an expert. But again, we are seeing increase in inquiries. And I think that’s because people are starting to get kind of more comfortable with the market.
Josh Pugh: Awesome! And Martin on that, when it comes to varying interest rates and what it means for options as well as exchange rates between Australia and the US. I know we actually had a question just come in around transferring deposits and when preapprovals really in timing of those things. So how are you seeing how do those factors play into the process when somebody approaches you? And also, just to extend on that, we had an earlier question that came in that was around the idea of how early should people be coming to you to sort of take advantage of all of those timings?
Martin Zheng: Yeah. So firstly, to answer the question on transferring money back, no issues with that. You just simply either use someone like a big bank, like what is it like a HSBC and you transfer money back, or a transfer wise, or if you’re a bit more savvy, you can actually go through interactive brokers, they actually charge zero spread. So if you open up one of those accounts you can actually buy Spot FX and then remit it back. No issues at all with transferring money back.
So that’s that with rising interest rates or I guess the currency part first. Yeah, like I mentioned before, if you have a stronger currency, US dollar at the moment, then the banks actually convert that into Australian dollars and then they look at your kind of borrowing power with the US dollars. So again, I don’t like to kind of crystal ball what’s going to happen with FX, but you should definitely be doing things when the US dollar is strong. So that’s that one and then interest rates.
So I think one very interesting thing about interest rates is people say they want to wait and see again, right? So they want to wait and see what happens with interest rates. But what people often forget to consider is as the interest rates go up, the banks actually use a harsher interest rate to assess your borrowing power. So when interest rates were like 1%, they were actually giving out mortgages that were a bit more relaxed or they’re giving you a larger mortgage.
Obviously there’s risk when the interest rates go up and you have to make higher repayments. But if you’re waiting for interest rates to kind of stabilize and hit their roof that actually means that the amount that you can borrow when the interest rates are at the highest is actually lower. So if you can actually make those repayments and you want that kind of dream house, I keep using dream house because that’s kind of what our experts come to us for sure.
If they have kids, what they want to do is they want to buy that property in the suburb that they want to live in, where they want to have their kids go to school. It’s got a pool, it’s got a nice backyard and that’s what they want to move back into. And Sky can definitely help with the dream home purchase.
So if that’s what your consideration is, then you probably want to just take advantage of being able to borrow as much as you can. The flip side of that is the interest rates as an investment. If you’re looking at this as more of an investment then obviously the interest rates play a big part into how much free cash flow you get or how much returns. You’re going to get. But if it’s just about dream home maximizing your borrowing then earlier is usually better.
Josh Pugh: Okay. And Sky, from your perspective when it comes to sort of setting up these investments and planning ahead, if people are looking for management of those investments properties and they’re looking to sort of ongoing support, is that something you provide as well? Like when it comes to sort of thinking further into an investment strategy, is that where you can become responsible as well?
Sky Hammer: Yeah, definitely. And I did see a question come in regarding what kind of property management company should you use? Whether you should use one of the big names or I guess maybe someone smaller. So as part of our process with our clients, if it’s an investment property purchase, we’ll work with them and a property manager locally to find tenants during that settlement period most of the time.
So you have that peace of mind that day one post settlement, you’ve already got a tenant in place thinking about to move in and there’s kind of no concern there in terms of which property managers to use. We actually really like boutique property management firms. And the main reason for that is if you talk about some of the bigger names that everyone’s heard of in Australia and obviously my name that name them for legal reasons, but they’re structured a bit differently. So you might speak to a business development manager up front, they’ll onboard you, make you feel very special.
But then kind of the next week you’re speaking to a different employee who’s helping with the lease, and then the week after you’re speaking to a different one with maintenance and soon you realize you don’t really have one point of contact for that property, which as an Australian expat is a nightmare. So we generally try and work with property managers who sometimes they’re just a one person shop, they might have two or three staff and you kind of got that more hands on kind of approach to the property management.
Josh Pugh: Okay. And Martin, when it comes to your interaction with clients, is it an ongoing relationship with people that come in the door, or is it more of a you set them up, you obviously get to know them and set them up in the right way? Or is it something that people can approach you and say, let’s work together moving forward?
Martin Zheng: Yeah. So, look, all mortgage brokers are going to tell you the same thing, which is we look over the life of the loan. And yes, we do that. But I think it’s especially important for expats, because what happens is when you’re an expert, you’re usually on investment mortgages, but when you move back to Australia, you actually want to switch it to an owner, occupier, mortgage.
And it may just be a matter of calling up the bank, but when you switch, you really want to be at the best Australian owner occupier bank and get the most suitable mortgage for when you move overseas. So that big change in kind of status where you’re an expat moving back to Australia, that can actually play a factor in the advice given.
Josh Pugh: Okay. And Martin, we’ve had a few questions because we got a lot of questions around the spouse and I’ll come back to those in 1 second. But in terms of the legal status of someone, so the person, if you’re an Australian and you’re on an E3, a lot of Australians would be on some of them would be on green cards, some of them would be US citizens.
How does that play in the interaction? When it comes, obviously there’s going to be and there’s going to be a huge tax implication. It’s going to be one that they really need to consider. But when it comes to the mortgage, does that impact your approach to them when it comes to looking into a mortgage?
Martin Zheng: Yeah. So, look, I won’t pretend that I am a complete expert in the E3s and what happens in the US.
Josh Pugh: That’s why you’ve got me.
Martin Zheng: Yeah, exactly!
Josh Pugh: Right!
Martin Zheng: Maybe just can answer that from the Australian mortgage side or the Australian banks care about is your Australian citizenship. If you’re an Australian citizen, then you can pretty much go to any of the banks. You can get any of the banks, but they may not be the best bank. Whereas if you’re a foreigner, you have to go through FIRB what you are overseas. It actually doesn’t impact the Australian side of things. More likely, it’s going to impact your US taxes or your US structuring or US mortgage.
Josh Pugh: Yeah, okay. And that is a big consideration because yeah, and I just had someone I’ll point to that to the end of the webinar, but there are lots of considerations that need to be taken. And again, this is why we said at the very top that this is a great platform to start and Martin and Sky are great people to talk to when it comes to starting to look into this process. But they’re probably going to advise.
There’s going to be other people, there’s going to be financial planners, there’s going to be tax professionals. There’s a whole sort of bevy of people that you need to consider when you’re looking at this situation. Sky, do you work with I know a lot of people are looking at investing through their self-managed super funds or they might be starting companies to start investment processes. Is that something that you work with as well or is it more individual based at your end?
Sky Hammer: Yes, so we definitely do both. And one thing we haven’t mentioned, and we’ll leave this for a separate time, but we also purchase commercial property as well. And so that self-managed super fund that access to capital in there is used quite regularly for those kind of tops of purchases where people are trying to boost their income for retirement. So in terms of structuring, we work very closely with some of our accountants that we work with, but also our clients accountants who they’ve worked with for ten plus years.
So those structuring questions, whether you’re buying in a trust, a company personal name, they’re very much individual dependent. And so we have a role to play in that based on what we think their best purchases. In that point in time, the broker will often say you can borrow 1.5 million. By 1.5 million, the accountant will have a different view. And obviously, as a buyer’s agent, we have our own view. So we work together as a team. Very common in that space in terms of the structuring. But again, it’s the accountant that would take the lead on that piece.
Josh Pugh: And Martin do you want to touch on that in terms of when it comes to, like, people are talking about investing as businesses that approach with your end of the deal?
Martin Zheng: Yeah, so, look, I will actually say that if you’re trying to buy in SMSF companies, trust structures, et cetera, it is actually very difficult for Expats to do that. Yeah, I’ll just leave it as that. It’s actually very difficult. So what you want to do is you want to speak to a broker and we’ll make sure that the bank that we’re taking you to can actually accept that situation. And like Scott saying, you got to talk to your tax agent, etc. So it’s hard because you can’t actually rock up to a branch and just go speak to the branch directly.
Josh Pugh: Yeah, no, and I think the overarching message is that it’s pretty complicated. There’s a lot of moving pieces. You’ve got to look at this as a whole because it doesn’t work to sort of say, like, I’ve got my income and I just want to go get a mortgage. It really is a dynamic that takes both of you. The sort of last bit that I wanted to just quickly touch on is and I noticed a few questions coming in around credit ratings and things around how people are assessed.
Martin from your end, in the US, for people there’s a number out of 858 hundred is great. Does that transition to Australia? Is there something sort of similar? Do you build out like a number profile or is it, again, more of this sort of building a narrative than it is coming down to a raw number?
Martin Zheng: Yeah, so in Australia it’s actually less about a raw number, although there is a credit number which you can actually find on your report. The Aussie banks actually don’t look at it quite in a similar manner. Actually, you do an Equifax report and the bank will pull that and what they look at instead is like, how many credit inquiries have you made? So, for example, if you haven’t used a broker like us, and you’ve gone through CBA, NAV, Westpac, NZ, St. George, they’ll see all these applications and they’ll ask, well, why did you make so many applications?
And if you don’t have a good answer to them, they’ll be like, oh, this looks a bit off, but if you go through a broker, maybe the broker can explain they went through all these banks and the bank’s policies weren’t actually relevant for expats, and therefore they got rejected. But now we’re bringing you to bank C, and the reason why we’re doing this is because your policy is actually very favorable for this client, and therefore they’ve been rejected in the past, but they’re actually a very good client for this bank. So, yeah, there’s no number, actually, that the banks look at and say, no, this is the cut off.
Josh Pugh: Okay. No, I appreciate it. Sky, with our time closing out, I thought I’d give you the chance. Is there anything else you wanted to sort of really highlight when it comes to when people should get in touch or just in general about what people should know about the market?
Sky Hammer: Yeah, so I guess following the call, if you are either in that early stage or kind of a more advanced progress along that way, looking to buy your next property, obviously reach out to both myself and Martin. And we can kind of advise whether it’s best to go through this pre approval process first, or you may already have one in place. We can obviously work with that. But, yeah, I think that’s about it for now.
I guess I just reiterate that it is a complex process, but based on our experience, we’re trying to streamline this process as much as possible. So whether that’s buying properties off market that aren’t on domain and realestate.com or otherwise, just feel free to reach out. We’ll drop the link in so people can book in their discovery, call directly with us. But that’s it from my end.
Josh Pugh: Awesome, Martin and anything I know you’re going to say about preapprovals again, but anything else you wanted to add for the people watching as we finish up?
Martin Zheng: Yeah, so I guess for us, it’s just we have a mortgage and tax Arm, so for general mortgage and tax inquiries, feel free to book in a session with us. And we’re happy to give you kind of free advice from the mortgage side of things because that is a free service. The other thing I would say is you can sign up to our newsletter or you can sign up to get our eBook on our website.
And that eBook is a monstrous kind of 80 page pamphlet. You can actually digest yourself and you’ll get the one on one to expat mortgages. And yeah, feel free to do it yourself, but if you don’t want to go through that kind of eBook, then we’re here to help now.
Josh Pugh: Fantastic! And I know we’ve had a lot of questions. The Q and A has been blowing up, and we’ve done a pretty good job of trying to get through a lot of the questions, but a lot of them are getting very specific. And I think this is the perfect again, realize that it’s business, but speaking to people individually and actually being able to connect and say, here is my individual situation is vastly different from being able to ask generic questions.
So, Sky Hammer and Martin Zheng, I want to thank you both very much. Martin from Odin Mortgage and Tax and Sky Hammer from Convergence Buyers agents, thank you very much for joining me today. I’ll be sending out a feedback form so that everyone watching can give us some feedback about whether their questions got answered, what they want to follow up.
It also offers you to connect with Martin and Sky, and we can connect you directly, and you can book some appointments with both of them. But I want to thank everyone for joining us this evening, and thank you again, Martin and Sky. You’ve been sensational. We’ve gone through a lot of topics, and we’ve covered a whole lot, so thank you very much for joining me.
Martin Zheng: Yeah, thank you so much as well, Josh!
Sky Hammer: Thanks very much, Josh. And thanks, everyone, for joining us!
Josh Pugh: Fantastic! Thank you, everyone, and we’ll see you next time!