Buying a Home as a New Australian Immigrant

Are you a new immigrant to Australia? Are you looking for your opportunity to enter into home ownership here and give your family some security? There are so many new immigrants that migrate to Australia every year. Banks and lenders have criteria in regards to lending to new immigrants, usually you have to of lived in the country for a couple of years to qualify for a bank loan and have enough deposit available to qualify.

What if there was a way that you could enter into home ownership while you wait for these couple of years to pass? With Rent to Buy systems you can offer your family security and begin to lay a foundation for your family's future while you are waiting to meet the banking criteria. There are a few Rent to Buy type deals that suit new immigrants to Australia.

The first one is called a Wrap. This is where the seller already has finance in place with his/her lender and chooses to on-sell the property to you using his finance that is already in place. The seller becomes the buyers bank. The price of the property is agreed upon and written into the Contract for Sale. The Contracts exchange but do not settle for a period of time (anywhere between 2 to 30 years). Most Wrap deals settle within the first 5 years.

The benefit of a Wrap for a new immigrant to Australia is that no bank finance is required. The First Home Owners Grant can be used as part of the deposit, alongside a few thousand of the new immigrants hard earned money. The advantage here is that the new immigrant is locked into a house purchase with the price set in today's market while saving the deposit required and being in stable employment while waiting to qualify for bank finance. Traditionally, house prices continually rise, meaning that more savings would be required to gain bank finance in a couple of years time if the new immigrant were to wait and purchase their own home the traditional way. Using Rent to Buy systems to purchase their own home, the new immigrant is using time to his/her advantage by entering into the house deal BEFORE he/she meets the banking criteria.

With a Wrap, once Contracts are exchanged, the new immigrant has locked him/herself into a home purchase and cannot change their mind. The mortgage repayments would be made directly into the sellers bank mortgage account, not into his personal account. All rates and insurances would also be covered by the new Wrap buyer. Improvements can (and should) be made to the property (such as tidying up the gardens, painting inside and out, polishing floorboards, etc) to help encourage good capital growth.

At the end of the term, the new Wrap buyer is looking to refinance out of the deal with bank finance. If the new Wrap buyer wishes, he/she could stay with the seller until they have paid the full loan out in 25 to 30 years. Most Wrap buyers do not do this though. Most new immigrants wait until they have resided in Australia for the required period of time with steady employment and then present themselves to the bank for finance, settling themselves out of the Wrap deal with bank finance.

The second Rent to Buy type deal that suits a new immigrant to Australia is called a Lease with the Option to Purchase. This deal type is very similar to a Wrap, but with a few differences. In a Lease with the Option to Purchase, the new immigrant requires a very tiny deposit, which can be as low as $10.00. The new immigrant has the freedom in a Lease with the Option to Purchase to walk away at the end of the term and not purchase the property if he/she so chooses. The new immigrant would walk away from all the capital growth should he decide not to purchase and this capital growth would become the sellers reward. The new immigrant would lose everything that he/she had put into the deal should they choose not to purchase, just like renting.

In a Lease with the Option to Purchase, the length of the term ranges in between 2 to 7 years. Basically, the new immigrant is waiting for enough time to go by to qualify for bank finance. The amount of time needed would be whatever the banking system ask for as to how long you have lived in the country for and how long have you held steady employment. Once the new immigrant can show the bank what the bank is looking for in these areas, the new immigrant should be able to finance over into a bank loan. 

In a Wrap and also a Lease with the Option to Purchase, the title of the property does not change over into the new immigrants name until settlement. Paperwork exchanges at the beginning of the deal (with all terms agreed upon by both parties documented into the paperwork and each party receiving their own individual legal advice), but the settlement is delayed for a term of 2 to 7 years (sometimes the term goes as long as 30 years). During this delayed settlement period, the new immigrant and his family work together doing improvements to the property (such as doing the gardens up, polishing the floorboards, painting inside and out, etc) to help build and encourage capital growth in the property. At the end of the term, this is the new immigrants reward, a property that has risen in value during the term. 

The third Rent to Buy type deal that would suit new immigrants to Australia is what is called Tenants in Common. This is where a group of new immigrants (20 or less), get together and purchase a property. Each person obtains an unsecured loan (or pays cash if they have it) for a portion of the property price (this can be an equal or unequal share). The group of new immigrants then work together to do improvements to the property (polish floorboards, paint inside and out, do the gardens up, etc). The group also individually work at paying off their small unsecured loan as quickly as possible.

As each person pays off their small loan, the group can go ahead and purchase another property together the same way as above. The first house that was purchased can become the family home of one of the members of the group of new immigrants. The group if they so wished could do this over and over again until everyone in the group was set up with a home for their family!

Borrowing amounts of money under $20,000 is not hard these days. Many banks and lenders can offer these "small" loans as unsecured funds. If the 20 new immigrants were to borrow $16,000 each in unsecured funds, this would fund a property purchase of around $300,000 (including costs). As the funds are unsecured, there is no security over the property, which is a good thing. Tenants in Common is a very exciting way of purchasing property, especially for a group of new immigrants who are happy to help each other in this way.

Our DIY Rent to Buy manual covers in full these above mentioned home buying opportunities, plus a step by step guide to show you how to implement buying a property this way using Rent to Buy systems. Rent to Buy systems provides ways to purchase your own home, even when the banks say no!