Overseas borrowing

From: Cathy Baxter


Hi
Having a great time in Canada and have noticed that property in the big cities is cheaper than in say Melbourne or Sydney. Also money is cheaper - home loans at 3 - 4%, you can buy cars for 0.00 - 0.09% interest!

So it makes me think - can you obtain funds from overseas.

Could be an interesting option.

Any way must go.

Cathy
 
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Reply: 1
From: Juzz O'K


Cathy,

Great topic I'm researching this as well.
I want 2 know everything as well.
If you have an overseas account already
then your in luck. So how easy is it to
obtain an account overseas & will they accept
valuations on foreign investments??
One thing though, if your investing in Australian property I think your supposed to have foreign review board approval for anyone
outside of Australia investing. Most of the time the review board put restrictions on the percentage amount of foreign investment allowed in any project.
I have an example of this for one of the projects I'm in.
So how can you use foreign funds in a Aussie residential project? JV through a company setup could be one way.
Anyone considering this must obtain legal
advice from both countries as well I believe.

Juzz
 
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Reply: 1.1
From: Mike .


Hi Juzz,

I'm relocating to London shortly but still intend to invest in Australian property. I've been advised by Ernst & Young that I don't need FIRB approval to select properties, since I am an Australian citizen albeit a non-resident.

I've attached a summary of FIRB policy on the matter.

Regards, Mike
 
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Reply: 1.1.1
From: Rolf Latham


Hi Mike

FIRB wont care !

Lenders Mortgage Insurers wont touch you though, and some lenders will want to limit you to 70 %lvr

Ta

Rolf
 
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Reply: 1.1.1.1
From: Jeremy Laws


You can buy anything anywhere - provided you have enough down.
US 60-70% LV (similar to movie people, as we are also non resident aliens)
UK 70-85% LV (Buy to Let) 95% Owner Occ - IF you are VERY Lucky/lie well.
havent really tried anywhere else. UK you are also limited to a min loan of about 30k stg. UK rentals are awful in London, but you can do quite well further north. Be very aware property management in UK is 15% - I have yet to find out why. Kills the return - better in Sydney. Property markets the world over are IMHO a little 'hot'
 
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Reply: 1.1.1.2
From: Mike .


Hi Rolf,

ANZ told me they wouldn't adjust down my LVR but, on the DSR side, they would add 20% of the loan repayment figure (not sure if they mean total loans or new loan) to the expenses. The 20% is the Exchange Rate Movement Risk factor. Is this better than adjusting LVR down from, say 80% to 70%?

Regards, Mike
 
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Reply: 1.1.1.2.1
From: Rolf Latham


Hi Mike

There is a KEY word in your sentence.

"TOLD"

Talk is cheap, where the basic policy states one thing and an exception is made, one can not rely on that information. Even if you can get it in writing the lender will not be obliged to stick to their side of the bargain when the going gets tough.

I have had three cases of clients and friends that have had various promises given, however when it comes down to the wire, they are not fulfilled sometimes with very bad emotional consequences.

Most lenders will do 80 and some even higher on an exception basis only - for Aussies who are not resident for tax purposes.

It is ironic that a lender whom I wont name will provide funds at 80 % to citizens of Singapore NZ and Hong Kong, but only 70 % to expatriate Aussies working in those countries.

The 20 % is a new one on me. Really ? the Aussie is going to appreciate 20 % against the pound ?

If the 20 loading does not affect your buying power in reality then take the 80 %, since equity is king.

Ta

Rolf
 
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