Expat Mortgages?

Hi,

Wondering if anyone knew any info. or has experience on the pitfalls or advantages with an expat mortgage?

I live in Japan and plan to live here for 2-4 more years. Both ANZ and NAB have offices here which offer cross currency mortgages at around 2% interest, which switch to Aussie interest rates when I move back.

To get these loans you need 25% deposit, which I am in the process of saving for. My plan was to buy a 2 brm unit in Syd or Melb at around $400K, have the rental income cover the mortgage and use ongoing savings to pay the loan off quickly, then move to Australia when the loan was manageable at Aussie interest rate levels. Here is some info on NAB and ANZ.

http://www.nabasia.com/vgnmedia/downld/product_information_jp.pdf

http://www.anz.com/japan/ExpatMortgage.asp

Any info. or comment is appreciated.

Matt.
 
Your loan will be denominated in Yen. You need to be aware of and monitor the AUD / Yen cross rate. You also need an exit strategy if the AUD starts to fall.

If you are not sure about what I am talking about - you need to do more research :p
 
wouldnt buy a place just to wait for the interest rates to drop to determine when you move.
you might consider setting the aussie mortgage up with an offset rather than pay it down
 
Hi Matt

Ideally speak to a mortgage broker who is familiar with expats and cross currency mortgages. Someone like Rolf Latham (who frequents this forum) from www.asapfinancial.com.au would be a good starting point, as he's helped lots of expats, knows his stuff and is a great broker. I can only say good things from my clients who've used him, and I've dealt with him personally for a no. of years now.

Also be aware, if you didn't know already, that your serviceability for the loan will actually be assessed on the current Australian interest rate not the fantastically cheap yen rate to which you have access to. The idea of paying down the debt faster whilst the property is paying you is probably a very sound plan, but naturally talk to your broker/lender to structure things correctly for your specific situation.

Depending on where (or what) you're thinking of buying, you may not even need $400K. There's some great suburbs in both cities (though I can only comment on Sydney) that may fit your criteria, and $350K can still obtain a decent unit in many of Sydney's solid growth suburbs.
 
I agree with Jaque, speak to a mortgage broker back in oz, I am currently organising a loan whilst in the UK as an expat for a property in oz, but using a broker back in Melbourne (PT bear on this forum) and that has helped tremendously.

When dealing with the Aussie Banks directly here it was a hard slog, and they werent very flexible at all, I think in this scenario, deal with a Broker :)

Also, if you havent yet, make sure you listen to these podcasts in this thread - http://www.somersoft.com/forums/showthread.php?t=42387

This will answer pretty much any questions you may have had.
 
I agree with Jaque, speak to a mortgage broker back in oz, I am currently organising a loan whilst in the UK as an expat for a property in oz, but using a broker back in Melbourne (PT bear on this forum) and that has helped tremendously.

When dealing with the Aussie Banks directly here it was a hard slog, and they werent very flexible at all, I think in this scenario, deal with a Broker :)

Also, if you havent yet, make sure you listen to these podcasts in this thread - http://www.somersoft.com/forums/showthread.php?t=42387

This will answer pretty much any questions you may have had.

I think you'll find the loans mentioned by Matt would need to be done over in Japan. ANZ for one requires that brokers do a face to face interveiw with all clients. The product mentioned is for Ex-pats able to visit a branch in Japan. The contact numbers are also for O/S.
Should it be an AUD loan then most certainly deal with a broker over here as you're more likely to get access to a broker outside of normal banking hours which will speed the process up. All the broker needs to do is add you to one of the various messenger products about (if they don't have Skype) and they can speak with you free of charge. I found this very convenient with the last Ex-Pat who was living in the UK. The midnight & 1am sessions I must admit I don't miss but it's well worth it as the process is so much smoother.
 
It can be a trade off between rate, LVR and currency risk.

If you borrow in Yen you'll get a much better rate. Your serviceability will be higher, so you may be able to buy more properties.

If you borrow in AUD you'll get a better LVR, potentially be able to leverage more, so deposits won't be an issue, but your serviceability will be lower.

Purchasing in Yen also gives you a currency risk, but this could go either way.

The decision could go either way and it would depend on your circumstances. How quickly do you want to build a portfolio? Do you have more equity, serivceability or both? Will a currency fluctuation cause you to have a problem with repayments? What's your strategy and how does it fit in?

You probably need to get more information about your equity and serviceability positions before you can make a decision. You need to understand your options properly.
 
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