Credit History and Home loan Eligibility

[PeterJ]

Hi

We're moving to Oz this year and want to buy a house as soon as we can. When we arrive, I won't have any credit history. How long do the Australian banks normally need you to have been working before they'll lend money for a home? Is it 3 months? 6 months?

Is there anything I can do to speed this up? Does it make sense signing up with e.g. a phone contract as early as possible to establish a credit record (I know this helped when I was in the UK)?

Regards

Peter

[Sibella]

I don't know the answer to your question but personally I think you should wait at least a year before buying a property.

Take your time, there is no rush. Rather rent a while, check out different suburbs and make sure it's what you want.

[Katrol]

That is great advise Sibella.  I agree, we discussed the same thing.  Finding our feet first and being happy in a suburb first before looking at buying a property.  At least 6 months to a year.  In that time you can build a credit history and also get to know each bank and which one offers the best bond option.

[Nev]

Getting a loan seems really easy in Australia

We are on a 457 visa, so 4 year working visa, and i was able to get a car loan with a 20% Deposit 3.5 years repayment period after being in the country for a little under a month with no other security

I think if you hold off a year you will have no problem getting finance on a house

[Superkruz]

I think if you hold off a year you will have no problem getting finance on a house

I would not spend too much effort on building a credit history. I say this because generally, the banks look at:

1. Affordability-If you earn enough and can afford the monthly payment on top of your other living expenses, it ticks the affordability box.
   
2. Risk-This is determined by the valuation of the property, the deposit you pay, and your credit record. Obviously, if the house costs $1mil and the valuation is $600k, then your credit record, no matter how good it is, will count for nothing. The house is the real security for the loan, you simply must not have a bad credit history, and you will be okay to tick the Risk box.
   

In my opinion, credit history did not matter much when I applied for a loan as I did not have a history of ever using any credit facilities. All I had was a credit card that I never used. They looked at my income, compared the value of the house to the loan I was taking - and bingo.

[PeterJ]

Thanks.

[Robbie_P]

Hi Peter,

I bought a property within a year of being in Australia.

I dont think banks are too concerned about how long you have been in the country or previous credit history, but they do like to see things like:

1: How long have you been in your current job - this shows stability

2: Have you made it past your probational period

Banks also like to see 'genuine' savings, which can be generated from a period of 3-6 months.

All banks have different criteria, but if you have a deposit, a stable income and you can afford the repayments, there is no reason why a bank wouldnt give you a mortgage.

All the best,

Robbie

[Jitterbug]

We also bought within a year, about 10 months in, it helped that we had a good broker so we did not have to deal with the banks directly.

What Robbie_P says is spot on.

[Donovan83]

Wow this is so exciting I'd like to buy an apartment within about 6 months of arriving. I'm so over renting, I've been renting for about 3 years here in SA. What a waste!

I'm so fortunate. I will be staying with friends for 6 months when I first arrive, which will help me add enough to my savings that I'm bringing over to put down a nice deposit

I looked at some places while I was there and saw some REALLY nice and modern places that were relatively affordable in East Perth

[Bosch x 2]

I work in a bank and they will lend you money after your probation period at your employer is finished - which is usually 3 months (sometimes 6). I've never experienced a situation where they will ask for your Credit Report from SA.

[MarcelleVDMerwe]

Hi

As a general rule Mortgage brokers are available at no cost for a consultation. They will be able to advice on the best way to find your home.

Every state has a different first home owner grant but in WA if you are a Permanent Resident (PR) and have never owned a property in Australia you may be eligible for a first home owner grant from the department of state revenue.

In WA the grant is $7000 and stamp duty is exempt up to $500 000 and on a sliding scale up to $600 000 where after normal stamp duties are payable.

It may be worthwhile to make use of this but if you are interested in buying on a 457 VISA you would generally need about a 20% deposit. You would however need to find the right bank as not all lenders borrow to nonresidents. Loan terms are generally 30 yrs and variable rates are about 6%.

[CLAREandANDRE]

Hi.

This is my role at work. Feel free to ask any questions. I do work for a bank as a Lending Manager. What I have read above is accurate.

Policies do differ bank to bank. Ask a broker by all means, from that point though, I would deal directly with the institution than through the broker channel. In my experience they know a little about every bank but are a master of none. You could end up with an entirely different product or package recommendation.

Professionals are viewed favourably by banks. The need for "genuine savings" is only a requirement when offering less than 15% plus fees. The is usually 5% genuinely over a minimum 3 month period. That can come from sale of shares, property etc, does not necessarily mean that you have banked the money each pay. You don't even need to have passed 3 or 6 months work if you can prove that you are not subject to probation. The 3/6 months is considered usual probationary periods but not all jobs have them. (Most would). If you can get you PR before purchasing a house, you will be able to take advantage of the First Home Owners Grant. Every state pays a different rate. Currently, Tasmania pays $7000 for established properties or $15k for newly constructed (buy from builder for example) or homes you have a contract with a builder to build. If you buy a home before you get your PR, (excluding land- must be a residence) and your residency is granted within a year, you are still eligible to apply for the grant. You have 12 months to apply from purchase date.

So much more I could tell you, not sure what you'll find relevant. So if you have questions, just let me know ?