What are the requirements for a foreign currency loan?
Over and above standard Australian lending policy there are a number of measures
that overseas buyers also need to conform to;
- The currency of the loan must be the same as the currency of your income.
- The property offered as security must be in Australia.
- Foreign Investment Review Board (FIRB) approval is required.
Can I Borrow In A Different Currency?
If you are in the USA and are purchasing a property in Australia then the loan can be
in US Dollars however but Euros are not acceptable.
A requirement of some lenders is that you have a banking relationship with them in
Australia and the USA. This is usually for overseas investors purchasing a property
What is my borrowing capacity (how Much Can I Borrow)?
Foreign currency loans have a maximum loan to value ratio (LVR) of 60% of the
property value. Providing you meet all the above criteria, there is no limit to how
much you can borrow, providing it does not exceed 60% of the property value.
Our finance brokers are experts in Australian mortgages. If you would like more
information or for us to clarify your specific situation, please click here or call us on
+61 (3) 9827 9930.
Does The Exchange Rate Impact My Home Loan?
In short the answer is absolutely yes. If there is a currency movement then the
lender may need you to provide additional security or pay down the loan to keep you
total loan at 60% of the property value at all times. This is very similar to a margin
call for margin lending against a share portfolio.
For example, if a loan is $900,000 USD and the value of the property $1,500,000
AUD and the exchange rate is 1:1 then the loan to value ratio is 60%.
If however the AUD drops to 80 cents USD then the Loan to value ratio has altered.
The loan in AUD is now $1,125,000 on a property valued at $1,500,000. The Loan to
value ratio is now 75% and thus does not meet the lending policy.
The lender would then require the borrower to bring the loan to value ratio back to
60% either by paying a lump sum of cash off the loan, or by providing additional real
estate security located within Australia.
In many cases the borrowers are not in a position to fulfil this obligation thus forcing
the sale of the property, or if possible a refinance of the loan, which is highly