09 Oct 2024 Podcast: Q&A – Expats, Foreign Income, Should I Fix My Home Loan? & Offset Accounts

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In this week’s Q&A episode, we dive deep into key topics for Australian expats, smart offset account strategies, and the current fixed-rate landscape.


Evelyn answers a client’s question about how being an expat can impact borrowing capacity, explaining what types of foreign income lenders typically accept when living and working abroad as an Australian citizen.

We also explore how to maximise your offset account and debunk common myths around fixed-rate home loans.

Packed with valuable insights, this episode is a must-listen for anyone navigating the evolving financial landscape!

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You Have My Interest is brought to you by Everlend, a mortgage and finance broking firm built for the purpose of educating and empowering you to make informed financial decisions tailored to your wealth goals. Find out more and book in your free initial consultation at ​​https://www.everlend.com.au/

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You Have My Interest provides information and educational content relating to mortgages, finance and property. You Have My Interest‘s content is general in nature and does not take into account the individual financial, legal or tax needs or objectives of its audience members.

It is not intended as a substitute for professional advice. Listeners should seek out a licensed professional to discuss their individual financial, legal and tax requirements.

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Please find a Podcast summary below with the interview highlights:

In this episode of You Have My Interest, Evelyn addresses questions about fixed rates, offset accounts, and borrowing considerations for Australian expats. Here’s a summary:

Key Topics:

1. Market Update on Fixed Rates:

  • Fixed rates are continuing to drop, with some lenders offering rates as low as 5.39% for a 2-year fixed term (e.g., Macquarie for sub-70% LVR loans).
  • While attractive, fixed rates often come with restrictions such as:
    • Limited or no offset accounts (sometimes only partial offsets).
    • Caps on additional repayments (e.g., $30,000 over the fixed term with Westpac).
    • No access to redraw until the fixed term ends.
  • Evelyn advises borrowers to assess their financial circumstances, risk appetite, and the potential opportunity costs before locking in fixed rates.

2. Offset Accounts – Maximising Benefits:

  • What is an Offset Account?
    • A transactional account linked to your home loan, reducing the interest charged by offsetting the loan balance.
    • Example: A $500,000 loan with $50,000 in an offset account means interest is charged on $450,000.
  • Tips for Effective Use:
    • Keep your balance high throughout the month (e.g., deposit your salary directly into the offset).
    • Use a credit card for daily expenses, then pay it off in full each month using the offset account.
    • Avoid misconceptions: Weekly or fortnightly repayments don’t provide additional savings if the funds are just shifting between offset and redraw.

3. Borrowing as an Australian Expat:

  • Eligibility Considerations:
    • Must be an Australian citizen or permanent resident.
    • Lending options are limited, and not all banks accept foreign income.
  • Key Factors Lenders Consider:
    • Country of Employment: Preference for countries like the US, UK, and Singapore; challenges with locations like Dubai.
    • Employer: Some lenders require employment with large multinational companies.
    • Income Type: Generally only base PAYG income is considered; variable income (bonuses, commissions) and self-employed income are often excluded.
  • Loan Terms:
    • Loan-to-value ratios (LVR) are capped at 80%, sometimes 70%.
    • Refinancing options may be more restrictive than purchasing.
  • Documentation:
    • Most lenders require at least three months of income history and may not accept borrowers on probation.

Key Takeaways:

  • Fixed rates offer lower costs but come with trade-offs; consider your financial situation carefully.
  • Maximise offset accounts by maintaining high balances throughout the month and leveraging credit cards for day-to-day spending.
  • Expats face stricter lending criteria; working with a broker to navigate policies and options is essential.

Evelyn invites listeners to submit further questions and promises more insights in future episodes.

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