Overseas Mortgage Query

O

Oscar16

New Member
Messages
9
My daughter and husband are living in Australia and are trying to get an AIB mortgage (via a broker) in Ireland for a house they will initally rent out but will in a few years move back to Ireland and live in the house. The main issue is that as non-residents they can't get a 'Buy To Let' mortgage. Assessment for BtL Mortgages includes (i.e. acknowledges) the fact that the house will be rented out and the rent paid by the tenants will go towards paying the mortgage i.e. it will essentially cover the majority of the monthly mortgage repayment.
As non-residents they are only eligible a mortgage for a ‘Holiday Home’. Such mortgages are assumed to be re-paid by the owners of the holiday home. Assessment for such a mortgage does not include (or in any way acknowledge) that the house will be rented out and tenants will pay rent that will be used to pay the mortgage. They need to show that they can pay the full mortgage on the ‘holiday home’ as part of our monthly expenditure i.e. in addition to current Australia rent, childcare, bills, living etc.
They are aware as non-residents they also need to provide a 30% deposit. In addition they are also aware that their AUD incomes are ‘stressed’ for FX which effectively reduces them by ~20%, reducing the amount they can borrow. This is reasonable as the FX rate has moved by about this amount in the 12 years they have been there.

What are their options, is there any structure or lender that offers mortgages for the above senario?
 
Not what you are asking OP but are they 100% sure of their plans? Do they have a definitive timeline for moving back (eg you mention childcare, do they intend to return before a certain stage like starting school).

How secure is their employment should they move back, or would they even be able to if for example something happened in the Irish economy that prevented their being able to find work here? What are they trying to insulate against, I assume property price increases?

BTL or even holiday home rates are higher than residential. Factor in the potential for rogue tenants, managed from afar (even with the help of an agent or family) and changing rules around tenancies. 30% of the value of the home from their savings would be tied up in property, even if it is appreciating, could they have that earning interest or capital gains via another form of investment eg shares by buying a home in Australia that they later plan to sell (which might offer other benefits to them)? Have they considered the FX risk of essentially converting their AUD savings to EUR? Have they scenario planned for what they are trying to save versus the risk of property prices being higher when they return?
 
Have they approached an Australian lender?

I know nothing about the market but it’s not impossible that you might find a lender although I’d imagine rates would be high.
 
An Australian lender is unlikely to be willing to lend on the security of a property in another country; they don't want to have to enforce their seucrity in a country in which they have no staff or business, and where they don't have established relationships with solicitors and other professionals, etc.

They might, however, be willing to lend on the security of a property in Australia, if the borrowers had sufficient equity in an Australian property to offer as security.
 
You must log in or register to reply here.
Back
Top