Comparing Australian Loans To NZ Mortgages

Mortgages and their application process, in Australia and New Zealand, are fairly similar. Mortgage brokers are often used, loans are offered at a percentage of the value of the property, and variable interest rates are normally the most popular for customers.

Discussed below are the similarities and differences between the two countries when buying property. This includes information for NZ citizens and NZ permanent residents looking for an Australian Mortgage.

New Zealand citizens and permanent residents

Residents of NZ can buy through a broker, or deal directly with a bank or lender when looking at real estate in their own country. Variable and fixed interest rates are available and can be fixed for up to 5 years. They can also qualify for a loan of up to 4 times a gross annual income.

The term of a loan is up to 25 years for most financial institutions. Some lenders calculate a UMI (uncommitted monthly income) when assessing applications. This is a minimum surplus the banks would like borrowers to have after living expenses and repayments are deducted.

If you are looking for property in Australia you can read below, and contact us to find out more. You can call us on 1300 889 743 (when outside Australia call +61 2 9194 1700), or you can enquire online.

Buying Real estate in Australia, for Australians

Most of the application process is very similar to that of NZ. Mortgage brokers are similar, as are the interest rate terms. The UMI is also calculated by banks and lenders to help determine what percentage value of the property can be borrowed.

Differences between loans include the term of the mortgage. In Australia it is common for loans to be up to 30 years in length. Loan-to-value ratio (LTV) is known as the LVR in Australia. However, they both indicate the % value of the property a bank will loan.

Gross income is important. However it is more obviously taken into account in NZ, whilst in Australia the overall financial status of a borrower is more commonly expressed.

What is the Special Category Visa (SCV)

This is a visa that citizens of NZ automatically qualify for when they visit Australia. They are treated in the same fashion as Australian permanent residents when buying real estate. NZ permanent residents have qualified for this in the past, however currently only NZ citizens are eligible.

An SCV holder is eligible for the First Home Owners Grant (FHOG), unlike most foreign citizens and temporary residents. They also do not have to apply for Australian Government approval from the Foreign Investment Review Board (FIRB). Permanent residents of NZ must apply for FIRB approval, as it determines the level of foreign investment within Australia.

NZ permanent resident loan applications for Australian property are assessed dependening upon their visa status within the country. They are more likely to receive a temporary resident mortgage.

How much can be borrowed in Australia and NZ?

In both countries up to 95% of the value of the property can be borrowed (95% LVR in Australia, 95% LTV in NZ). However restrictions will apply for NZ permanent residents in Australia, and unless they are buying with an Australian spouse or partner, they will not be eligible in Australia. Foreign citizens and temporary residents usually borrow at 70% to 80% LVR in Australia.

Borrowing over 80% LVR involves extra costs in both countries. In NZ this is either a low-equity premium, or mortgage indemnity insurance. These are a lump sum cost that can be paid up front or added to the mortgage. In Australia this is known as lenders mortgage insurance (LMI). It protects the lenders if a borrower defaults on their repayments.

Apply for a loan today!

Here at the Home Loan Experts, our mortgage brokers are specialists in loans for New Zealand citizens and permanent residents. If you have a property in mind and would like to know more, contact us on 1300 889 743 (when outside Australia call +61 2 9194 1700) or enquire online.