An Alternative Funding Mechanism for Expatriates and Foreign Investors 

There are situations where the most effective form of financing for a property in Australia, or elsewhere in the world, is a foreign currency loan. These loans allow expatriates and offshore investors to borrow in a currency other than Australian dollars to purchase or re-finance a property in Australia, or elsewhere – allowing you to take advantage of lower interest rates. Currencies available include US Dollar (USD), Pounds Sterling (GBP), Euro, Singapore Dollar (SGD), Canadian Dollar (CAD), Hong Kong Dollar (HKD), Japanese Yen (JPY), Swiss Franc (CHF) and New Zealand Dollar (NZD), amongst others.

These loans can give rise to exchange losses (and gains) and you need to approach them carefully, fully understand their operation and seek professional advice prior to making any commitment. However, for the long term Australian expatriate, or foreign investor, with either access to an income stream in the borrowing currency, or other assets in the borrowed currency, they can provide access to materially lower borrowing costs when compared to AUD loans.  The table below provides a simple illustration of the differing annual repayment costs based on interest and exchange rates current as at May 2010 on a AUD500K loan over 25 years with quarterly repayments of interest and principal on a property in Australia.  The comparison does not include loan establishment or other fees and is provided for illustration purposes only – figures should be confirmed with the loan provider.

There have been significant changes recently in both comparative exchange and interest rates. UK interest rates have remained at almost historic lows - and anyone with UK property is advised to consider re-financing, if this is an available option.  Also, interest rates are now often a function of how much you are borrowing against the property - with lower "loan to valuation ratios" (LVR's) attracting lower interest rates.

Exfin offers access to both European and Australian banks with specific experience in the provision of property finance for expatriates and offshore residents who intend to purchase property in Australia, New Zealand, United Kingdom, Spain, France, Portugal, Hong Kong, Singapore and selected locations in Dubai, Canada and the USA. Loans in support of purchases in other countries are possible - please provide full details in any Inquiry.

A short summary of the features of their mortgage loan facility appear below:

• A free currency switching facility

• Up to 100% financing available **

• Competitive interest rates

• Flexible and sophisticated repayment options

• ** subject to credit status and additional security

Please note that there is a minimum loan size of GBP150,000 or its equivalent, and that the percentage of the purchase price that you can borrow may depend on the currency borrowed.

Australian tax residents should note that access to these type of loans is usually difficult to arrange, but financing is possible in the right circumstances for property purchased in certain European countries such as France, Spain, Italy and the UK - and in the United States.  In these situations the minimum loan size will differ by country and the type of property you are seeking to buy - but you should expect to contribute at least a 30% deposit on any purchase and be in a strong financial position. The financing of Australian property using foreign currency loans is basically restricted to Australian expatriates and overseas investors who have an income in the currency of the loan.

If you are interested in exploring this facility, and receiving more specific details without obligation, please complete the Inquiry Form referred to below.  There may be occasions where we will require more details from you before progressing the inquiry with the Bank(s), but normally you can expect a response within one working day of the Inquiry.

Complete the Inquiry form