Things expats should consider when securing a mortgage from overseas

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Posted 2 years ago by Admin and guest written by Josh Brown Financial Writer at

Kiwi’s love to travel. All around the world there are New Zealanders working hard to see new landscapes, experience different cultures, advance their careers and save some money. There are a lucky few that manage to settle into lucrative careers overseas and find themselves in the fortunate position of having the ability to purchase an investment property while still working in a foreign country. It can be tricky to secure a mortgage when you are not in your country of citizenship though. This article provides insight into the finer points of securing a mortgage in New Zealand from overseas.

What to look for in a broker

There are a few common truths about finding a good mortgage broker.

Your broker should:

  1. Have good reviews or be referred by a trusted friend or colleague

  2. Have good local property market knowledge

  3. Be experienced, helpful, friendly and easy to get along with

  4. Be transparent about what they can and can’t do for you and provide information about how they get paid

Questions to ask your broker:

  1. What fees do you charge?

  2. What will be the total cost of this loan, including fees and interest, for the sum I am borrowing and the term I have chosen?

  3. What changes can I make after the mortgage is set up?

  4. If I buy a new house, can I transfer the existing mortgage?

  5. If I have a problem that I can’t sort out with you, where can I go for help?

  6. Is there a prepayment penalty?

  7. Are there any incentives and bonuses available? Can I receive a higher bonus based on the amount I’m borrowing?

The size of your deposit

When you are looking at purchasing an investment property from overseas, you’ll need a decent depositMost lenders will require a minimum deposit for a home loan of at least 20% of the amount you are borrowing. So, if buying a house worth $600,000 you’ll need to save a deposit of at least $120,000.

There may be some exceptions, however, such as through the Welcome Home Loan Scheme for first-home buyers, which would require a deposit of 10%. If you're buying a residential investment property, or you’re using a residential investment property you already own as security for a new loan, you'll generally need at least a 30% deposit.

If you can only come up with an amount more than the 20% deposit threshold, there are some advantages:

  1. The bank may give you a better interest rate because you represent a lower investment risk for them.

  2. You can avoid paying Lender’s Mortgage Insurance (LMI) because your loan-to-value ratio (LVR) is 80% or less.

The Exchange Rate

If you are buying a house from overseas, it’s going to cost you money in foreign exchange fees to pay the deposit. The best way to mitigate this cost is by using an independent remitter such as OrbitRemit offers some of the best rates around and they pride themselves on being reliable, fast and secure.

If you plan to transfer money in the future and you have an estimate of the amount, it may be worthwhile to consider buying currency futures that will mature shortly before the date of the transfer. This will prevent any foreign exchange risk between the date of purchase and the date of settlement. Speak to a financial adviser to help you sort this one out.

AML – Anti Money Laundering

When you are transferring large sums of money, documentary evidence may be required to satisfy AML obligations. We will try to make this process as smooth as possible.

The Anti-money Laundering Act was put in place in October 2009 and came into force in 2013. The legislation requires you to provide proof of wealth and the documentation around how you obtained your wealth. Here is a list of documents that are acceptable as proof:

  1. Your latest bank statement and corresponding payslip showing your weekly/monthly income being paid into this account.

  2. Savings statement

  3. Relevant tax forms showing your yearly gross earnings for your most recent period of employment may also suffice.

  4. Proof of Property Settlement Statement or Loan agreement.

  5. Proof of Inheritance.

  6. Other evidence can be provided (subject to approval)

  7. It is important to note a combination of the above may also be requested.

Purchasing property is always a good investment, especially in New Zealand. There are many things to consider when you are purchasing a house, especially when you are based overseas. Always remember that a simple phone call or email is all you could need to clear up hurdles that may seem complicated but are actually very simple.

 Image credit: photo by Sarah Ferrante Goodrich from Unsplash

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