Expatland Case Study

 

Overview

Expat service providers are excellent at helping those moving abroad to get ready for their first adventure.

At Expatland, we have a team of industry professionals primed and ready to help with finances, visas, and the all important logistics. But what if you are already an expat? Can the Expatland Global Network still help you?

The answer is yes.

Once you settle in to your new life you’ll continue to handle your finances, taxes and mortgages. You may also have investments or properties back in your home country that need managing. You may even consider returning home at some point. Our E-Teams are here to help with all aspects of being an expat.

Let’s talk about moving back home and some of the pitfalls that can occur.

Introducing The Smiths

The Smith family have been expats for over 10 years. They relocated from Melbourne and have lived in both Singapore and Hong Kong with their two children.

The Smiths kept their apartment in Melbourne worth circa $800K and they had a residential investment home loan secured against it for $450k.

They’ve decided to return home in the next two years to purchase a family home, so started the process of applying for a new home loan with an Australian Offshore Bank that they had used previously. They started their application for a home loan of $1.2m. They signed the contracts with a finance clause and they expected to secure approval within two weeks.

Signed, Sealed, Delivered?

Unfortunately the two week deadline came and passed and the Smith’s were informed that their loan was declined after an excruciating four week process.

Initially the bank processed the application as an investment home loan, not a home loan. This meant they would have had a much higher interest rate. Not only that, they discounted both the bonus income of Mr & Mrs Smith and their salary entitlements by 20%, which can be typical of Australian lenders.

How did this happen?

Well, the bank didn’t truly know their client. They didn’t understand the needs of an expat trying to return home. They didn’t understand the expenses an expat incurs and much of their time was wasted trying to understand their customer after it was too late.

Unfortunately, The Smith family had already committed to their purchase and were due to settle within 6 weeks, which resulted in a variety of panic applications with online lenders, which were not fit for purpose.

Understanding is key

The Smiths were then recommended to Aus Finance Group, part of the Melbourne E-Team in Expatland’s Global Network. Aus Finance Group (AFG) has spent significant amounts of time working with lenders to understand the policies and procedures relevant to expats. AFG immediately understood the Smith’s needs and prepared to match them with lenders who understood their requirements.

Within 24 hours all information matter was canvassed to two Australian banks that took into account their bonus income. The Smiths were identified via Skype and executed documents in Singapore. The loan approval was granted within four business days at the terms they wanted.

This only goes to prove that expats needn’t be disadvantaged by their circumstances if they are connected with the most relevant service providers.

How AUS Finance Group can help you

One of the largest challenges as an expat is dealing with your Australian Bank & Financier whilst earning income offshore.

Lenders will typically discount the attributable value of salary & bonus income by 20-100% depending on the source and contractual arrangements behind them. AFG has already identified suitable Lenders who best recognise expat’s offshore income.

Furthermore, Lender’s debt servicing has become rules based and more stringent. This means it will now typically sensitize a borrower’s servicing ability by discounting foreign income sources, i.e.:

  1. Discount contractual base salary by 20%;
  2. Discount bonus income by up to 100%; and
  3. Assess net income (adjusted for above) at Australian tax rates.

AFG will assess your requirements and identify a Lender who will best recognise offshore income.

It will then submit full loan applications together with supporting documentation, manage a Lenders loan application, identification & security process on the expat’s behalf and proactively keep the expat informed of developments.

by: AUS Finance Group

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