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Australia: Home Loans
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Home Loans
AUSTRALIAN HOME MORTGAGES
The regulations state that acquisitions of residential real estate in Australia by foreign interests
require prior Foreign Investment Review Board approval and that all contracts of sale to acquire
residential real estate by foreign interests must be made conditional on Foreign Investment Review
Board approval and must allow at least 30 days for a decision to be granted.This means that all
foreign persons not holding Permanent Residence status in Australia must submit all applications to
acquire residential real estate to the Foreign Investment Review Board for examination, regardless of
the value of the property.
REQUIREMENTS
Prior to applying for a home loan in Australia, you will need certain mortgage documents to support
your application, these may include:
- Group certificates or tax returns going back two years for everyone applying for the loan.
- Your last two payslips or a letter from your employer setting out your salary details if your employment has recently changed.
- Current savings statements showing you have a deposit plus six months records of your savings history.
- Evidence of the rental income you have received from all investment properties.
- If you're applying as a company, a copy of the last two years financial statements including balance sheets, profit and loss accounts, memorandum and articles of association and trust deeds.
- Current Loans Statements, or 6 months repayment history if you're re-financing.
- A copy of the front page of the contract and rates notices of any properties you're offering as security for your loan.
THE DEPOSIT
You will generally need at least a 10% deposit. In certain circumstances you may only have to pay 5%.
Don't forget you'll also need roughly 5% of the purchase price to cover taxes and legal fees.
If you're a first TIME home buyer you will usually need to show that at least 5% of your deposit has
been saved by you in regular instalments over the last six months. The rest of your deposit can be
received as a gift from a friend or relative.
APLLICABLE TAXES
Stamp Duty
Stamp duty is a tax applied to many types of transactions in Australia. The most common being c
onveyances of property, transfers ofshares, policies of insurance, leases and powers of attorney.
Stamp duty is paid by the purchaser of the property, on the basis of the total value of property
transferred. This duty is payable not only on conveyancing of property, but also on mortgages.
All states have stamp duty concessions for first home buyers, and some states extend concessions to
any principal place of residence. An exemption is available for designated government authorities,
some educational authorites and registered charities.
Land Tax
Land tax is levied on the unimproved value of taxable land held, by all State governments and the
Australian Capital Territory. It is not levied in the Northern Territory. The rates and the levels at
which land tax applies vary widely. Victoria has the highest maximum rate at 5 per cent, and ACT the
owest at 1.5 per cent. In all states except Victoria the taxpayer's place of principal residence is
exempt from land tax. However, very expensive parcels may receive only partial exemption or none.
Land owned and used by charitable organisations, religious bodies and schools is exempt from tax in
all States and Territories. Land designated for primary production is exempt in all States but
Tasmania.
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