PAYG or W2 Income

Ordinary Income used for expat lending is generally in-line with standard lending practices and can be accepted. Lenders will shade foreign income (depending on the currency the income is generated in) and take a portion.

Tier one currencies, lenders will generally take 80% – 100% of the employment income. For tier two or silver type currencies, this currency will still be accepted through can be shaded to 60% – 80% of the income. Lenders will be more comfortable with Australian expats who can demonstrate that they generating PAYG or W2 income from an employer who is a large multinational.

Lenders will require to see an employment contract, confirming the length of the employment and the salary package. This will also be compared against the last 3 months of bank credits (to confirm the NET income matched the employers pay slip after tax and deductions are withheld). If an Australian expat receives other income as part of their ongoing salary package, this can be considered for servicing purposes.

Some Australian expats will have other pre-tax deductions removed from their payslip (medical, dental, travel costs) for tax purposes. This will be factored into the living expense section of the applicant.

Bonus or Commission Income

Provided this has been paid to the Australian expat for greater than a two year period, a portion of bonus income can be accepted for borrowing purposes. Commission income can also be accepted, if in line with the industry and paid for greater than a 12 month period.

Australian Rental Income

Existing and proposed rental income can be accepted for borrowing purposes. Generally, lenders will take 80% of the gross rental income for servicing. For existing properties, this will be confirmed against rental statements and for a proposed purchase this can be verified using a rental estimate and the bank valuation.

Negative Gearing

The negative gearing benefits that Australia Tax residents receive, cannot be accepted for expats living overseas. Lenders take the assumption that the borrower is not an Australian tax resident and the negative gearing benefit will not apply to the servicing calculator.

Overseas Rental Income

Rental income received from overseas investment properties can be accepted for servicing purposes. This income is converted to AUD and shaded per normal lending guidelines. If the borrower has an overseas mortgage, this will need to for servicing purposes. 

Self Employed Income

Self-employed income for borrowing purposes, can be accepted. Full financials and Accountants letter will be required to present to the bank, particularly if the tax jurisdiction is significantly different to the Australian Tax system. If the financial statements are not presented in English, the documents will need to be translated for certification purposes.