Congratulations! You’ve successfully navigated the early stages of the Australian home buying process. With your loan pre-approved and the perfect property in sight, you’re on the cusp of realising your dream. But what exactly comes next?

This blog post walks you through the journey from this point onwards, focusing on the nuances that you, especially as an Australian expat, might face.

Understanding the Importance of Pre-Approval

First, let’s revisit what your loan pre-approval means. This is a green light from a lender stating they are willing to loan you a specific amount under certain conditions. It’s a powerful tool, positioning you as a serious buyer in the eyes of sellers and real estate agents. However, remember that pre-approvals have an expiry date and are subject to change, particularly if your financial circumstances alter. As an expat, it’s crucial to ensure that your pre-approval considers any foreign income or assets you might have. Lenders often view foreign income differently, which can impact the amount you’re eligible to borrow.

It's also important to consider any changes to your financial position since your pre-approval was obtained, to ensure that this won’t impact your formal approval and next steps.

Step 1: Re-Evaluating Your Pre-Approved Loan

Now, it’s time to match your pre-approval with your chosen property. Does the property’s value align with the amount you’ve been pre-approved for? If the property is more expensive, you might need to reassess your financial situation or negotiate the property price. This is especially pertinent if you’re an expat; fluctuations in foreign exchange rates can impact the value of your income or assets in Australian dollars. If needed, have a conversation with your lender to adjust your pre-approval.

Moreover, if there have been significant changes in your circumstances (like a new job, a change in salary, or a shift in marital status), update your lender. Transparency here prevents any surprises down the line.

Step 2: Making an Offer on the Property

Armed with a pre-approval, you’re set to make an offer. But how do you ensure it’s competitive yet within your means? Research is key. Understand the local property market trends, and if you’re an expat, consider consulting with a local real estate agent who can provide insights into the specific dynamics of the Australian market.

If you’re working with a Property Investment Adviser, their research and due diligence will ensure that you’re paying the right price for the right property here, and provide you with their research and analysis on the state, suburb and the property itself.

When making your offer, it's not just about the price. Terms and conditions (like settlement dates or contingencies) also play a crucial role. In Australia, offers can be made verbally or in writing, but remember, a verbal offer isn’t legally binding. It’s when you sign a contract of sale that the offer becomes formal. For expats, consider the time difference and communication methods to ensure you remain actively involved in this process. Be sure to also check with your Mortgage Broker on the timing involved to get to formal approval, to ensure that deadlines are not missed.

Step 3: Formal Loan Approval Process

Transitioning from pre-approval to formal approval is a critical phase. You'll need to submit a comprehensive set of documents that may include proof of income, bank statements, and identification documents. As an expat, ensure that your foreign income documentation meets the lender's requirements – this might involve extra steps like currency conversion or income verification through foreign tax returns. Many of these may have already been submitted during your pre-approval, so you may only have to provide your latest payslip.

Your lender will conduct a property valuation to ensure the property’s worth matches the loan amount. This step is vital in protecting both your interests and the lender's. If the valuation comes in lower than expected, you may need to renegotiate the purchase price or find additional funds to cover the difference.

Step 4: The Cooling-Off Period

In Australia, after signing the contract of sale, you enter the cooling-off period. This is a short duration (usually five business days, however this can vary between states) allowing you to back out of the contract if you change your mind. However, withdrawing from the contract might incur a penalty, typically a small percentage of the purchase price. For expats, it’s essential to understand this concept as it might differ from property laws in other countries. Use this time to conduct any additional checks or finalise your financing.

You may also have other conditions in your contract such as the offer being subject to finance approval, subject to valuation matching contract price, or even a building and pest inspection.

Step 5: Preparing for Settlement

Settlement is when the property officially becomes yours, but there’s preparation to be done before this. Engage a conveyancer or solicitor to handle the legal work. They will coordinate with your lender to ensure all financial and legal obligations are met for the transfer of the property. They’ll also check for any outstanding taxes or restrictions on the property.

For expats, one key aspect to manage is the timing. If you’re living abroad, ensure that all documents are ready and signed ahead of time, and consider granting a Power of Attorney to someone in Australia to handle settlement if you can't be there in person.

Step 6: Settlement Day

Settlement day is when the transfer of ownership is finalised. In Australia, this usually occurs 30 to 90 days after signing the contract. On this day, your lender will provide the loan amount to the seller, and in return, you’ll receive the keys to your new home.

As an expat, coordinating this from abroad can be challenging. Ensure that your conveyancer or legal representative has all the necessary authority and information to act on your behalf. They will oversee the finalisation of payment and ensure that all legalities are handled correctly. It’s also crucial to have open lines of communication with your real estate agent and lender to ensure everything goes smoothly.

Step 7: Post-Settlement Actions

Once the settlement is completed, there are a few immediate tasks to attend to:

• Property Insurance: Ensure that your new home is insured from the day of settlement. As an expat, you may need to research and secure this remotely.
• Utility Connections: Organise the connection of utilities like electricity, gas, and water. Many services in Australia offer remote setup options, which can be convenient if you’re not yet in the country.
• Council Rates and Strata Fees: Familiarise yourself with ongoing costs such as council rates or strata fees, if applicable. These are typically prorated at settlement but will be your responsibility moving forward.

Long-Term Considerations

As a new homeowner, especially as an expat, there are several long-term considerations:

• Property Management: If you’re buying the property as an investment or won’t be moving in immediately, consider hiring a property manager. Your property investment adviser will be able to recommend one for you here.
• Tax Implications: Be aware of any tax obligations in Australia, particularly if you’re earning income overseas. It’s wise to consult with a tax professional familiar with both Australian and international tax laws.
• Mortgage Management: Stay proactive in managing your mortgage. Keep an eye on interest rates and consider refinancing if better rates become available.

Maintaining Your Australian Home from Abroad

As an expat, managing a property from overseas can be a unique challenge. Here are some tips:

• Regular Communication: Maintain regular contact with your property manager or a trusted contact in Australia to keep tabs on your property.
• Online Tools: Utilise online banking and property management tools to stay updated and manage financial aspects remotely.
• Local Network: Establish a network of local contacts such as a handyman, cleaner, or gardener to maintain your property.

Conclusion

Embarking on your Australian home buying adventure, particularly as an expat, is an exciting yet complex journey. From securing your loan pre-approval to navigating the settlement process, each step requires careful consideration and planning. But with the right guidance and resources, you can successfully turn your Australian property dream into a reality.

We hope this guide has provided a clear outline of the path forward and prepared you for the exciting journey ahead. Whether you’re settling into your new home or managing it from afar, remember that each step is a milestone towards achieving your property goals.

Ally Home Loans Pty Ltd is your ally in finance for all of your home loan, investment property, business and commercial financing needs. With our wide range of lending solutions, expertise in financial planning and investment strategies, and extensive experience in working with both Australian residents and Australian expats, we are your partners for your lending needs.

Book an obligation-free, complimentary consultation here today.

Ally Home Loans Pty Ltd is an Authorised Credit Representative (Credit Representative Number – 494608) of My Local Broker (Australian Credit License – 481374). Important Disclaimer: Your complete financial situation will need to be assessed before acceptance of any proposal or product.