Singaporean investors view Australia is a spectacular country, that is well known for accepting all cultures around the world, another big thing that Australia is well known for is having a lot of land and empty space.
This is the reason why the Australian property market continues to increase at a rapid rate, where supply for properties, often cannot keep up with the demand of properties.
Purchasing a property in Australia is relatively a simple process, however as a foreign investor there are a few things that need completed even before considering buying a property.
The Foreign Investment Review Board (FIRB)
The FIRB is a government department that was established in 1976 in order to advise the Government and the Treasurer on Australia’s Foreign Investment Policy.
It reviews every single application to purchase a residential property, by a non-Australian (New Zealand Citizen, Foreigner with a permeant visa, Permanent resident of Australia, and so on). If the FIRB suspect that a foreign citizen/company is trying to use the property in order to generate rental income or any other speculations, then they have the right to disregard the application.
Singapore-Australia Free Trade Agreement (SAFTA)
SAFTA is central connection of a strong economic relationship between Australia and Singapore. The agreement ensures that both countries treat each foreign investor from the other country basically as their own citizen, and because of this it creates a greater trade liberation and a tariff-free trades when either country decides to purchase any goods. However, in the purchase of real estate there still needs to be an approval by the appropriate government department.
Any international students, over the age of 18 year and are studying at any educational/ tertiary institution for greater than a year will be granted to purchase a property.
An approval for the purchase of a property may take between 2-4 weeks as of when the application is submitted. If you require any additional information, visit the FIRB’s homepage.
Finding Professional Help
If you are a non-Australian resident and you wish to purchase a property in Australia, it is most likely that you will need to contact a solicitor to handle any of the legal work that is required in the purchase of the property.
Before even seeking professional help, it is important that you have chosen which state you want to purchase in, as some solicitors may not be able to assist you in a particular state. They will also complete the legal work that is required of the process of the FIRB.
Access to Funds
If you are able to purchase a property out right without having to borrow any funds, then continue onto the next section, if not the continue reading.
After you have contacted a team of professionals and the FIRB application has been approved then you need to find a way to access funds, and the most common one is a loan.
In order to be able to take out a loan, it is important that you have all the appropriate documents to present to a bank, including loan documents, employment letter, tax returns and your pay slips. A professional will ensure that you have all the required documents to acquire a loan.
The number one rule before you even consider searching for a property, is that your loan has already been pre-approved, if it hasn’t been, then you will be wasting a great deal of time.
What is Pre-Approval?
Pre-approval is one of the first steps of organising a home loan. When people first meet with their bank or financial institute to discuss a mortgage, they are offered a pre-qualification assessment.
A pre-qualification assessment is usually a simple calculator that looks at your income, dependants, expenses and debts. The calculator will generate a likely figure that you may be able to borrow.
Pre-qualification amounts are definitely not set in stone, therefore it is important to apply for pre-approval to find out the exact amount you may be able to borrow given your unique circumstances.
After your lender receives all of the information they request, the process can take a few weeks before you are granted an official statement of a pre-approved amount they will loan you.
Why get a pre-approval?
A pre-approval is a great indication of how much you may be able to spend on a property. The pre-approval takes into consideration all of the information you have provided in order to generate a likely figure that you will be able to spend.
Without a pre-approval you may be limited to the amount of homes you may purchase. Many specialists advise against bidding at auction without a pre-approval as once you submit an offer that is accepted you are not able to retract it.
Pre-approval gives you the confidence needed to make sure you look at homes within your budget and feel comfortable making an offer.
What does a pre-approval not offer?
In one word: guarantee. A pre-approval is just that, it is the stage before receiving an official home loan approval. The amount you are pre-approved for is not a definite amount that you will be able to spend however or wherever you may like.
The amount does not take into consideration any changes that may have occurred since you were granted the pre-approval, such as change in income or debts, and it does not guarantee that the lender will value an individual property as much as it may sell for.
Each banking institution has their own underwriting criteria, and their own property valuations. If you use your pre-approval to purchase a property that they deem to be worth less than what you are willing to pay, they may reject or adjust the loan amount you were pre-approved for.
Finding the Right Property
After you have acquired the funds to purchase a property then you are able to start your search. If you are living outside of Australia or you are new to the country, consider contacting a buyer’s agent, as they fully understand the property market in Australia, or just in a particular state.
They will be able to assist you in finding a property, determining market value, communicating with agents, inspecting properties, and finally securing the property in a legal manner, which will save you time and stress.
Meaning that everything will be taken care of for you. They will be able to professionally negotiate with the selling agent, to ensure you do not blow your budget. When it comes to putting down a deposit, they recommend an amount that should be paid, normally it is around 10% of the property price.
Your buyer advocate will complete a final inspection before settlement, to ensure that the property is in the same condition that it was when you purchased it.
Moving into Your Property
After you have purchase the property and finalised the settlement, you are then able to move in and the loan will be advanced. Your solicitor will finalise all the legal paper work so that you do not have to worry about anything.