Moving country is always a difficult time. You may have left loved ones behind and even your own family may be following on later while you try to find a home to settle in.
When you move to Australia you tend to lose your credit history and have to start over again. If you had good credit before then it’s a pain since you have to start all over again, although if you had bad credit it gives you a chance to start from fresh.
Since most migrants have no credit history when you move to Australia the banks don’t particularly like lending you money (and we know this from experience). They will either charge you higher rates, bigger deposits (the standard is 20%) or won’t lend to you at all unless you have a very good job.
There is also the Foreign Investment Review Board (FIRB) to consider. This Board examines all application to buy real estate by foreign people and companies. At the time of writing temporary residents are allowed to buy one residence as their home (not for investment purposes) and approval is usually granted as long as you sell the property when you leave the country permanently.
FIRB approval is only required when there is an unconditional contract of sale so only when the decision to buy has been taken.
So if a you’ve just moved to Australia and you want to buy a place but can’t get bank finance does that mean that they have to rent forever? No it doesn’t since there are other ways to buy a house other than using bank finance. One way is a process called ‘rent to buy’ or it can be known as ‘try before you buy’.
As a new migrant you should only buy if you really know that you want to settle in Australia. We know that may seem obvious but some migrants only come here for a couple of years for work and know that they will be leaving after that. If you are on a temporary visa, as the legislation stands at present you will need to sell your home when you leave permanently and since you don’t know what they price of your property will be then it may not be the right time to sell for you.
The ‘rent to buy’ consists of two parts – the rental agreement and the option agreement. The rental agreement is simply a residential tenancy agreement and anyone who has rented before will know the basics of one of those. The option agreement (or Deed of Option) is the right to buy the property by an agreed date for a fixed amount. Since you have the right but not the obligation to buy you do not have to apply for FIRB approval at that stage. Only when you have taken the decision to buy the property do you actually have to apply for FIRB approval.
For further details about the advantages about rent to buy please sign up for our free report.
For up to date information on the FIRB please visit their website at http://www.firb.gov.au/content/default.asp.