Property

Can Expats Buy Property in Australia?

The answer is yes – but it comes with conditions. Australia’s government welcomes foreign investment in property, but it regulates it carefully. Expats (meaning foreign nationals who aren’t Australian citizens or permanent residents) can purchase Australian property, but they face extra:

• Rules
• Approval steps
• Taxes (like capital gains tax and income tax)

Who Is a Foreign Buyer in Australia?

In Australia, the law uses the term “foreign person” to classify who needs special approval to buy property. If you are an Australian citizen or hold permanent residency, you’re not considered a foreign buyer – even if you’re an Aussie expat living abroad. 

As you might expect, citizens and permanent residents (as well as most New Zealand citizens living in Australia) can buy any property without prior government approval. However, anyone else – including temporary residents on visas and overseas investors – is deemed a foreign person so you have to follow the foreign investment rules. 

And being labeled a foreign person isn’t a judgment on character; it’s literally just a legal definition. The idea is to ensure that foreigners buying property do so in a way that benefits Australia. 

The Role of the Foreign Investment Review Board (FIRB)

Any foreign person purchasing property needs to get approval from the Foreign Investment Review Board (FIRB). FIRB is the government body that reviews foreign purchases to make sure they align with national interests, like we mentioned before. 

So before you buy, you apply for FIRB approval and pay an application fee. The fee isn’t trivial; it scales with the property value. For example, buying a house under AUD 1 million incurs a AUD 14,100 FIRB fee, which only gets higher the more expensive your home is. 

Luxury real estate deals can see fees well over AUD 100,000. This is, of course, on top of the purchase price of the property itself. And failing to get approval when required can lead to steep fines or even forced sale of the property, so it’s not something you can skip as an expat.

Most applications by expats are approved, especially if you’re buying a new investment property or building on vacant land (more on those options below). The government mainly wants to ensure the investment adds to Australia’s housing stock. 

What Can Foreign Investors Buy?

Australia sets clear limits on what types of residential property foreign buyers can purchase. The general rule is that expats should invest in new or additional housing rather than competing with locals for what’s already a limited supply of existing homes. 

Established dwellings (i.e. second-hand houses or apartments that have been previously owned or occupied) are heavily restricted for foreign buyers. In fact, from 1 April 2025, the government has temporarily banned foreign persons from buying any established dwelling at all. (This two-year ban, which is in effect until 31 March 2027, was introduced to ease housing affordability pressures.) 

So under the current rules, even expats on temporary visas can no longer purchase an existing house as a home. 

That said, you can see on that link from the Australian Taxation Office (ATO) website that limited exceptions do still exist – for example, if a foreign investor plans to redevelop an old property into multiple new units, that may be considered, since it adds to the housing supply.

By and large, though, established dwellings are off the table for foreign buyers right now. So, what can you buy? 

New Dwellings

New constructions are your main target. New dwellings – like brand-new apartments or houses that have never been occupied – are fair game for expats. Buying off-the-plan from a developer or a newly built home gets easier approval because it’s creating new housing stock. 

Vacant Land

Vacant land is another option for foreign buyers, provided you intend to build a residence on the land within a certain timeframe. The government doesn’t want speculators just land-banking, so if you buy vacant land, you’ll be required to start construction (usually within 2-4 years as a rule of thumb). 

There’s an emphasis on use: if you buy land or a new property, you’re expected to put it to residential use (living in it or renting it out). In fact, there’s even an annual vacancy fee to discourage foreign owners from leaving properties empty  – if your property is unused for over 6 months a year, you may incur a fee equal to your FIRB application fee. 

That makes holding a vacant investment quite costly and is a big incentive to either occupy the home or have tenants.

Other Land

Lastly, note that commercial properties (like offices or shops) and agricultural land have their own separate rules and are not as restricted as residential homes. But for most expats, the interest is in home – from investment property that generates rental income for you to places to live while in Australia. 

Navigating the Australian Property Market as an Expat

It helps to do your homework on the property market and local buying process. Start by researching areas and prices through online property portals like Domain or Realestate.com.au.

These websites list most properties for sale and can give you a feel for what’s available within your budget. And consider how the location of a property might affect its long-term value and rental appeal. Are you looking in a capital city like Sydney or Melbourne, where prices are higher but rental demand is strong? 

Or perhaps you’re eyeing Brisbane, Perth, or the Australian Capital Territory (ACT) (home to Canberra) for more affordable options. 

Once you have a target property, now’s the time to speak with local professionals. A reputable real estate agent can guide you through making an offer or bidding at auction (auctions are a common way to buy homes in Australia). 

Since you’re an expat, you might also consider hiring a buyer’s agent, who are licensed professionals that work on your behalf to find and negotiate a property purchase. They can be especially useful if you’re overseas and can’t attend inspections in person. 

Speaking of inspections, when you find a property you like, try to view it yourself or have someone you trust do so. Pictures online can definitely be deceiving. Then if the property checks out, proceed with those building and pest inspections so you know the home is in good shape.

Legal Conveyancing 

Your solicitor will:

• Review the contract of sale (which in Australia can be quite detailed)
• Ensure the title is clear of issues
• Coordinate the closing (known as “settlement”)

The process and timeline can vary by state – for example, some states have a cooling-off period after signing a contract, but others (like buying at auction in most states) do not. Your lawyer will guide you on this. They’ll also make sure the Foreign Investment Review Board conditions are met and that your purchase is registered appropriately. 

There’s now a requirement for foreign owners to register their property on the national Register of Foreign Ownership, and your conveyancer can help with that too.

How Upscore Can Help

If you’re an expat serious about investing in Australian property, consider getting your finances in order early with Upscore’s Finance Passport! It can help you organize your financial profile and present yourself as a credible buyer to lenders and sellers alike. 

Get your free Upscore Finance Passport today!

Spain Expat Property Tax: Everything You Need to Know

You’ve undoubtedly got this idyllic image of Spain in your head that’s led you to wanting to get a property there in the first place. 

It’s not fun to talk about, but unfortunately there are a bunch of Spanish tax rules and bureaucracy to handle before you get there. Any expat needs to understand these before committing and moving abroad. 

From property tax in Spain to wealth tax and capital gains, there’s quite a lot to unpack here. But we’re going to break down some of your core responsibilities throughout this article so you can start purchasing property in Spain without getting lost in jargon.

Understanding Your Status and Tax Liabilities

Before you start comparing regions along the Costa or scouting city apartments, clarify your non-resident status. Australia and Spain share a tax treaty, but if you spend fewer than 183 days a year there, you generally face non resident income tax rather than full Spanish income tax. 

That’s basically just so the Spanish tax authorities know how to treat your earnings and your annual taxes on any foreign income. Yeah, unfortunately, even if you never set foot in an office, owning a holiday home triggers tax liabilities that you’ve got to face. 

What you can do, however, is prepare for this early on. That will save you a bunch of headaches when the Spanish government mails your tax bill.

The Basics of Purchasing Property

Right, so once you’ve settled where you want to live (or rent out) you’ll need to negotiate a purchase price and perhaps sign a promissory contract. 

At this point, you’ll pay a deposit while awaiting the final contract. The property’s cadastral value (which is maintained by municipal registries) may differ from your purchase price, but both of these figures can actually sway your transfer tax and annual real estate tax bills. 

That said, the transfer tax you’ll end up paying usually varies by region. But expect rates somewhere between 6% and 11% of the declared price. It goes without saying that that tax rate alone can add tens of thousands to your outlay, so definitely factor it in before making an offer.

Annual Real Estate Tax and Municipal Charges

As to be expected, you’ll have regular bills that you’d get anywhere once you own some Spanish property. The annual real estate tax, known locally as IBI, depends largely on the property’s cadastral value. 

Each municipality sets its own municipal tax rates, so your seaside villa might draw a higher bill than an inland apartment. 

On top of that, some towns levy a council tax-style charge for services like rubbish collection or street lighting. These levies run year to year – just make sure you don’t miss a payment as it can lead to penalties or liens against your property ownership.

Wealth Tax: A Different Angle

You’ll end up facing wealth tax if your Spanish assets and global net worth surpass a certain threshold. Naturally, we get that not every owner is going to fall under this bracket, but in regions like Catalonia or Madrid, it kicks in for net assets above around €700,000. 

That includes:

• The value of your Spanish home
• Other real estate
• Financial investments

The Spanish government actually changes these rates every so often, so double-check the current band before assuming you’re safe. Of course, not everyone is going to see a bill, but it’s one of those things that catch many buyers out who thought they only had to worry about once-off purchase costs.

Capital Gains Tax When Selling Property

Should you decide to exit the property market, you’ll need to pay capital gains tax on any profit. To calculate your gains, you basically just compare your purchase price plus documented renovation expenses against the sale price. Then apply the current tax scale, which ranges from 19% for smaller gains up to 26% on anything substantial. 

Non-residents face a flat withholding of 3% at sale closing, but that’s a down payment on the full obligation. 

Lanter, you file a return to reconcile the withholding with your actual liability. Yeah, it’s a lot to think about, but it’s one of those things you’ll want to know about to avoid any sort of surprise down the line.

Renting Out Your Spanish Property

Turning your home into a holiday let brings in rental income, but it also means a few extra forms. Non-residents report gross rental receipts and can deduct certain expenses like interest or community fees before facing the 19% flat rate.

For residents, the rate actually links to your overall earnings under Spanish income tax. But either way, keeping tidy records of rent and insurance is definitely key here because failure to declare rental income can trigger audits by Spanish tax authorities. And they’re swift to chase unpaid sums.

Navigating Non-Resident Income Tax

If your Spanish earnings stretch beyond rent (say dividends from a local company) you’ll deal with non resident income tax on that too. Again, that same 19% flat rate applies to most passive income streams. But you must file a Form 210 quarterly if you earn anything in Spain outside wage income. 

Even minimal yield from Spanish investments or a summer-long rental calls for this form, so set aside a moment each quarter to pay tax and file online.

Other Common Tax Implications

Beyond some of the bigger categories we’ve already touched on, there are a handful of other smaller charges worth considering. 

For example, a stamp duty can apply to mortgage deeds, while some communities tax second-home vacancy. 

And if you plan on renovating, an IVA (value-added tax) may attach to contractor invoices. Then you’ve got wealth tax and inheritance duties to think about if your estate plans include passing the place to your heirs. 

Working with the Spanish Tax Authorities

If you’re used to using local online portals or you don’t even speak Spanish, you’re probably going to struggle a bit when you need to interact with Spanish tax authorities. 

So that’s why most expats appoint a gestor or tax lawyer to:

• File returns
• Secure certificates
• Negotiate payment plans
• Handle the bureaucracy
• Translate notices
• Ensure deadlines aren’t missed

From simple IBI payments to sorting out the whole new property tax proposal, you definitely want a local contact in your corner at this stage.

The Big Picture for Australian Buyers

In essence, you’ve got to think of buying this property not only as a lifestyle investment but as a financial commitment that comes with ongoing costs. Each step – from purchasing property to selling property years later – has a range of tax liabilities that you need to think about. 

So planning for annual taxes and understanding your status for non resident income tax, even just keeping tabs on Spanish tax rules, is something that makes the whole process less overwhelming. 

How Upscore Can Help 

Ready to make your next move with confidence? Sign up for Upscore’s Finance Passport today and get personalized guidance on mortgages across multiple countries – completely free. 

Get your Spanish Finance Passport today!

How to Buy Property in Greece as a Non-Resident

Have you been dreaming of a villa or a holiday home by the Mediterranean? We certainly don’t blame you. But how to buy property in Greece as a foreigner? The good news is Greece joined the European Union in 1981, so it uses the Euro and familiar laws. 

Greece is not going to blow you away in terms of heat (as it might if you were moving from, say, the United Kingdom), but plenty of Aussies are still drawn here because of Greece’s culture and relaxed lifestyle. You could even be thinking about renting out a Santorini loft from Sydney. 

The Greek property market has had its ups and downs. Prices surged strongly in 2021-2023, but they’re still below their 2010 peak. In practice, this rebound means bargains can be found, especially on holiday islands or in rural towns, but conditions are naturally going to vary depending on where you look. 

For context, prices differ widely: as of 2025, prime Athens averages around €2,200 per square metre, whereas touristy spots like Santorini or Mykonos can be near €4,000/m². You basically breathe in Mykonos and you’ve spent €20. 

But if you’re considering investment rentals, note that Greece will ban new short-term rental licences in central Athens starting 2025 to ease overtourism and housing pressure.

Documents and Local Steps

First off, you’ll need a Greek tax number. Known as a tax registry number (AFM), it’s mandatory for the entire purchase process. You apply for an AFM at the local tax office (DOY). (If you can’t visit Greece, a lawyer or accountant can get one for you by power of attorney.) Put simply, no AFM, no deal. 

Next, open a Greek bank account. You’ll want one to handle:

• The deposit
• Purchasing property
• Taxes
• Utilities

Along the way, you’ve got to gather a few essential documents: Greek authorities will expect your valid passport, the new AFM, and proof of income or tax returns (like when applying for a mortgage at home). You’ll also need a valid entry visa for Greece. Beyond that, Australians face no extra restrictions compared to EU citizens. As long as you have your paperwork in order, Greek officials treat you like a local.

Local Assistance

It’s also very helpful to engage a local real estate agent and a lawyer who knows about the Greek real estate market. An agent brings market smarts – knowing which neighbourhoods suit retirees versus holiday rentals – and they speak the local language of listings and negotiations. 

A lawyer handles due diligence: checking title at the local land registry (Ktimatologio) to make sure the seller is the legal property owner and that there are no surprises like unpaid taxes or illegal additions. This attention to detail helps avoid problems later.

Searching for Properties

Once you’re ready to search, remember that Greece offers a variety of homes. A Greek property purchase can vary from central Athens flats to hillside villas on Crete. Many Australians look at beach towns or islands for that holiday vibe, but also check up-and-coming regional areas. 

Use international property portals or have your agent set up targeted viewings. If possible, visit in person: seeing the view and testing a village’s vibe just can’t be done online. Also ask your agent to gather the last year of utility bills and title deeds in advance – these can reveal hidden costs or needed repairs.

When you find the right place, the offer-to-contract stage begins. You make a formal offer, and if the seller accepts, it’s common to sign a preliminary contract (a compromis) with about a 10% deposit. This locks in the deal under agreed terms (purchase price, closing date, etc.) for both sides. If you later back out without chuse, you’ll usually forfeit that deposit, so double-check everything before signing.

Signing the Deed (Final Contract)

Within a few weeks of the preliminary agreement, the final contract is signed in front of a Greek notary. Both you as the buyer and the seller (who are the current property owners) need to show up for this, each with valid ID and their AFM. 

At the signing, you then have to pay the remaining balance of the purchase price plus all the associated costs. For a resale home, that includes the property transfer tax – typically around 3% of the property’s assessed volume – plus a small stamp duty. (New builds incur 24% VAT instead.)

After the Sale

The notary or your lawyer then registers the sale with the local land registry. This part’s exciting since it legally finalises your property ownership. The title deed is put in your name; only after registration can you truly say you own the house. So until this actually happens, the property isn’t officially yours, no matter what the contracts say. After registration, you can transfer utilities into your name, and the local tax office will send any future property tax (ENFIA) bills to you.

Make sure you’re ready for a few extra costs too. Besides the deposit and property purchases, budget roughly 8-12% of the price for closing costs. These include notary and registry fees, any agent or lawyer commissions, and the taxes we mentioned above. We’d recommend that you keep some euros in your Greek bank account so you can cover these when the time comes.

Additional Considerations

As touched on earlier, Greece welcomes Australian buyers under the same terms as its own citizens. Still, you’ll need to coordinate between two countries, which means: 

• Setting up international money transfers
• Converting currency
• Timing any travel

One practical tip: Australian banks will ask for paperwork when you transfer large sums overseas. Keep your documents ready and consider locking a good AUD/EUR rate (a specialist transfer service can help). 

Tax-wise, expect to pay Greek levies. For instance, Greece charges about 15% capital gains tax on any profit if you sell within five years, and it imposes a modest annual property tax on owners. You’ll also need to report any rental income or profit in Australia, though a tax treaty usually avoids double-taxation.

If you’re thinking about staying there for a bit longer, consider Greece’s Golden Visa. Buying €250,000+ in property (or €500,000 in hot zones) actually earns a residency permit.  This isn’t required just for buying – it’s really an extra perk. Greek bureaucracy can feel relaxed: the notary signing is formal, but expect it to take time. Your Greek lawyer should be able to handle many of these steps for you if you can’t be there in person.

So, if you’re thinking about buying a permanent home abroad or even just a pure investment, make sure you take it one step at a time. The process is straightforward once each requirement is met. 

How Upscore Can Help

To top it all off, consider a tool like Upscore’s Finance Passport. It helps Aussie buyers by compiling and verifying all your financial documents upfront, completely for free! 

Sign up to Upscore’s Finance Passport now!

The Ultimate Moving Abroad Checklist – Everything You Need

Moving overseas – especially if you’re going to somewhere that doesn’t speak the same language as you – can be pretty anxiety inducing. Even if you’re mostly excited about it, you’d have to agree it’s like stepping into the unknown. 

You’ll quickly see how there’s way more to the whole process than just booking your flight when you’re getting ready to leave your home country. That includes gathering a range of important documents and setting up a new bank account. Literally every part of your move needs attention. It’s not just something you do on a whim.

So we’ve made a moving abroad checklist to cover everything you need in order to settle in properly, wherever you’re planning on moving to. This includes things like:

• Paperwork
• Finances
• Health care
• And more 

Get Your Important Documents and Visas in Order

First things first: sort out your passport, visas, and all those vital papers. You can’t have your passport expiring for at least six months after you set off. Pretty much any major country, including the one you’re probably thinking about travelling to, needs this kind of buffer to let you in. 

So we’d advise applying for any necessary visas or work permits you need for your destination country as soon as you can since the processing can take a while.

Then after that, get every important personal document that you might need. So this includes:

• Originals (and copies) of your birth certificate
• Marriage certificate (if applicable)
• Academic transcripts
• Any licenses or certificates relevant to your move
• School records (if you have kids)

And it’s also a decent idea to get an international driving permit if you plan to drive abroad because one of these IDPs proves your Australian licence is actually valid overseas.

Keep these documents somewhere organised in your carry-on luggage. Just make sure it’s safe because you definitely don’t want to lose them. 

It’s also not a bad idea to leave photocopies or digital scans with a trusted friend or relative back home so you’ve got some kind of backup. We get that this might sound a bit overly cautious or needlessly meticulous, but being this way with paperwork only takes a bit of prep and will save you headaches when setting up your new life.

Sort Out Your Finances and Banking

Money matters a lot when you’re making any big move. Obviously it helps if you’ve got more cash to play with, but it’s not even just that. You’ve now got to decide what to do with your Australian bank accounts – will you keep them open, or close them out? 

Notify your bank that you’ll be abroad so none of your cards get randomly frozen when charges suddenly appear from overseas. People tend to keep an account open so they can handle any remaining bills they’ve got back home, but you’ll also want to open a bank account in your new country that you use on a daily basis. 

Ask your Australian bank about international transfer fees or limits too, as you don’t want to be caught off guard by any restrictions your host country might have on money transfers.

Tax Responsibilities

Let the Australian Taxation Office know about your move if you’re leaving Australia for more than a few months – you must tell the ATO within seven days if you’re going overseas for over 6 months. 

And make sure you know what your tax obligations are in Australia and in your destination country so you don’t end up paying double. Australia only has tax treaties with a handful of countries to prevent double taxation, so otherwise you are probably going to be liable for taxes in two places. 

If that sounds complicated, just get in touch with a financial advisor. They can help you through issues like:

• Superannuation
• Investments
• Currency exchange

Take Care of Health and Insurance

Don’t forget to look after your health during this move. When you go abroad, you won’t have access to healthcare in your host country, so you’ll need to arrange your own health insurance coverage. 

So that means researching international health insurance plans that suit your needs in the new country. And you’ll want travel insurance to cover the actual move itself but also the first few weeks of your life abroad. 

If you have existing policies (for example, private health or life insurance), check with your insurance provider about whether your coverage will still be valid overseas. There’s a good chance you’ll probably have to update or extend your policy.

See your doctor for a general checkup and ask if you can get some copies of your health documents. For instance, keep a record of immunisations (vaccination records for all family members) and any important medical files or prescriptions you’ll need. 

Bringing these along will help new healthcare providers in your destination country understand your history and ensure continuity of care. Pack a basic travel first-aid kit and enough of any prescription medication to last until you can find a local doctor.

Handling Any Loose Ends Before You Leave

Again, start by deciding what you want to do with your house or apartment back home in advance. If you’re just renting, you need to give notice to your landlord. If you own a home, on the other hand, you could either sell or lease the property out to get some rental income while you’re away. 

Figure out what to do with your vehicle as well – you could sell it or arrange for transport overseas if you plan to drive in your new city.

Don’t forget things like cancelling or even just updating some of your services and subscriptions. Obviously things like a Netflix subscription can stay, but you’ll need to notify your utility companies of your move so you can settle any final bills. 

Set up mail forwarding with Australia Post or a private service so important mail reaches you abroad – or just get it sent to a family member’s address. It’s also a good idea to update your contact info to your new overseas address with institutions like:

• Your bank
• The electoral roll
• The Australian Taxation Office

You also need to take care of any legal and personal matters, which could be just updating your will or giving a trusted person power of attorney to handle some of your affairs while you’re gone. And before you hop on the plane, exchange a bit of Australian currency into your destination country’s cash so you have local money in hand when you land. 

Lastly, it never hurts to prepare for the cultural change. Read up on your host country’s customs, and maybe learn a few key phrases in the local language. These are just small steps but you might find it helps you settle in a bit faster.

How Upscore Can Help

Upscore’s Finance Passport compiles all your income and credit history into a single profile, which makes it way easier to share with banks or lenders in your destination country. It’s completely free, and a great way of comparing different lenders when you’re applying for a mortgage abroad.

Sign up for Upscore’s Finance Passport today!

Moving Abroad From UK – Advice and Tips

Ever dreamt of moving away from the UK? We totally get it. Even the summers here rarely get above 20 something degrees, so we don’t blame you for wanting to go somewhere with nicer weather. On the other hand, you might be looking for new work abroad opportunities. And if nothing else, there’s nothing wrong with just wanting to experience life beyond your home country.

So making the leap to relocate is obviously quite exciting, but it’s definitely not without any kinds of challenges. Sure, moving overseas promises incredible new experiences and a chance to reinvent your daily life, but living abroad also means dealing with practical hurdles – including:

• Different laws
• Unfamiliar cultures
• Being far from friends and family
• Possible language barriers

From visas and paperwork to banking, we’ve got a bunch of tips throughout this article that can smooth your transition. And if you’re actually determined to turn this dream into a reality, smart planning is key. Here are some essential tips to get you started:

Planning and Preparation

Do your homework. Research your destination’s:

• Culture
• Climate
• Visa requirements before you go (and if British nationals need to do anything extra)

Next, you’ll need to notify the UK authorities. Make sure to tell all the relevant government offices (like your local council, HMRC, pension and benefits providers, and the Student Loans Company) that you’re leaving the country. Do this as early as possible so you can avoid any kinds of issues. And keep in mind that your UK citizenship and voting rights aren’t affected just by moving abroad – you remain a British citizen unless you actively change it.

After this you have to organise a few different documents and get your insurance sorted. Start gathering all key documents well in advance – ensure passports (and any visas) are up-to-date, and make copies of vital records (which could be birth/marriage certificates, etc).

Again, you’ll also need to arrange appropriate insurance for your move. Get comprehensive travel insurance (and health insurance if needed) to protect yourself during the move. Finally, budget for other costs like shipping your belongings or getting some temporary accommodation somewhere so you’re not caught off guard. And always make sure that you have enough money set aside to cover your moving expenses and a few months of living costs for safety.

Visas and the Immigration Process

Getting the right visa is essential. After Brexit, British citizens lost their automatic right to settle in EU member states. Not ideal. So this basically means that if you want to move to an EU country, you’ll need to apply for a visa or residency permit. Don’t be put off by this – it’s still all very achievable, there’s just a few extra forms and fees you need to sort out. And in other European countries outside the EU, you’ll have to meet that nation’s immigration requirements.

Every destination country you’ve been thinking about has its own rules, so research the visa options that fit your situation. There are a few common pathways you can go down here, which include:

• Work visas
• Family reunification visas
• Student visas
• Retirement visas (if you plan to retire abroad)

You’ll generally need to show proof of funds, insurance, and so on – often a job offer for a work visa or sufficient income for a retirement visa.

Start the visa process early, as it can take months. Check the official embassy or immigration website for your target country to get an up-to-date list of requirements. 

And remember, the immigration process doesn’t end when you land – you are probably still going to have to register with local authorities or apply for a resident ID upon arrival. Under the Common Travel Area, you can still live and work in Ireland visa-free.

Finance and Tax Considerations

Handling your finances across borders naturally needs to be a top priority. So, before moving, it’s well worth opening an international bank account that you can use from anywhere. Wise do some good ones. Many banks offer offshore or expat accounts that make managing money abroad simpler. 

An account like this basically lets you hold money and make payments in multiple currencies without constantly worrying about exchange fees. Ideally, set up your new account before you leave the UK – in some cases you might need a local address or visa first, so check the requirements. 

It’s also a smart move to keep a UK bank account open (or open a new one you can access online). That way you have an account in your home country’s currency (GBP) for paying ongoing UK bills (like a mortgage), which also protects you from currency fluctuations.

Furthermore, it’s a good idea to research the living costs and have a think about how you’ll move money (a specialist transfer service or multi-currency account can save on fees). Check the tax considerations too: double-taxation agreements mean you typically won’t pay tax twice on the same income.

Housing and UK Property

If you own a home in the UK, decide whether you plan on selling or renting it out while you’re abroad. Plenty of British expats do this, since it’s just going to be sitting there if not. Selling gives you capital for the move, whereas renting (via a letting agent) can cover your mortgage and provide income (you’ll still owe UK tax on that rent).

And when it comes to getting a house in your new country, research your options and plan where you’ll live for the first few months. Many people rent initially so they can get a feel for the area before committing to buy. You wouldn’t just want to move to whatever location on a whim permanently before realising you hated it there. 

Check online listings and speak with local estate agents about rental costs and neighbourhoods – rents could be lower than in the UK, or much higher in some cities. Also ask about typical lease terms (in some countries landlords want a larger deposit or several months’ rent upfront). 

If you have children or plan to move with family, factor in proximity to schools and safe residential areas – and check what international schools are available if needed.

If you’re thinking about buying property in your destination, learn about the whole process and get professional advice. Laws on property ownership by foreigners generally differ in each country. 

Always have a local lawyer review contracts and make sure you understand all the fees and taxes before you buy. For most people, renting first and getting to know the market is the safest approach. Once you’re settled and financially ready, you can decide if purchasing a home abroad makes sense for you.

Moving abroad is not easy – you might face culture shock or a language barrier – but give yourself time to settle in and you’ll surely enjoy the experience.

How Upscore Can Help

Ready to take the next step? Upscore’s Finance Passport can make your move abroad smoother by simplifying the finance side. It compiles your UK financial history into a profile so you can apply for mortgages in your destination country and even across multiple countries without the usual hassle – all for free!

Sign up for your free Finance Passport today!

Buying A House Abroad – What You Need to Know

If you’re thinking about purchasing real estate in a foreign country you’re probably either looking to get your dream holiday home or just an investment property that’s got global potential. 

That said, it’s not exactly an easy process. Some countries are worse than others, but depending on where you go it’s not always so simple – buying property overseas comes with unique challenges that don’t apply back home. 

So, we’ve put together a few tips to help you make informed decisions when buying a house abroad.

Why Buy Property Overseas?

For both lifestyle and financial reasons, overseas real estate definitely has its benefits. Owning a house in Bali or a condo in Spain is going to be gorgeous for obvious reasons. And at the same time, international property is a class way of diversifying your portfolio as you’re spreading the risk across countries. 

Even if the Australian market slows or property values dip, an overseas asset might still be going strong. Plus, some overseas markets offer lower entry prices or higher rental yields than expensive Aussie cities which means you’ve got plenty of opportunities for healthy rental income from tourists or expats.

Investing abroad also lets you tap into growth in developing markets. While Australia’s housing is among the world’s priciest, some overseas markets are much more affordable. Just remember, a rock-bottom price doesn’t guarantee a profit – a cheap home in a struggling economy might stay cheap if demand never rises. Needless to say, thorough research is essential before you buy in an unfamiliar market.

Picking Your Location (and Knowing the Rules)

You’ve obviously got to find some kind of balance between where you’d like to live and how practical it actually is to live there – from Portugal to New Zealand. So before you fall in love with a location, check the fine print: can a foreigner even buy there? 

Property laws vary widely. Some countries make it easy – the USA and UK, for example, place few restrictions on foreign buyers. Others do the opposite: Iceland, for instance, only lets citizens or residents buy property, and Canada has recently barred foreign homebuyers. Always verify what foreign investment is permitted (or forbidden) in your country of choice.

New Zealand is a special case. The Kiwis restrict most foreigners from buying homes, but thanks to Trans-Tasman agreements, Australians are treated like locals when purchasing residential property. That makes NZ one of the easiest markets for Aussies to enter. And it’s naturally got a bit of that familiarity. Just don’t assume it’s cheap – New Zealand’s median property price in 2024 was actually higher than Australia’s.

In other parts of the world, don’t be surprised when you see how many unique and bureaucratic rules there are. Bali is a long-time favourite for Australians, but Indonesian law doesn’t allow foreigners to own freehold land. 

Foreigners can only buy Bali property under leasehold or “right-to-use” arrangements – freehold titles are reserved for actual Indonesian citizens. That hasn’t stopped people from flocking in; post-pandemic, Bali’s property market has boomed since foreign buyers bought up loads of the villas in hotspots like Seminyak and Ubud. 

In contrast, foreigners can buy freely throughout much of Europe, although you’ll still navigate a different legal system (often involving notaries and translated documents).

Know the local rules inside out before you commit. It’s wise to get advice from local real estate agents or buyers agents who know the language and process. Having a trusted expert on the ground can save you from costly mistakes in a foreign market.

Financing and Currency Considerations

Financing an overseas property can be trickier than getting a loan at home. Since most Australian banks won’t accept an overseas property as collateral for a mortgage, one common solution is to utilise some of the equity in your Australian home so you can fund the purchase.

On the other hand, some overseas lenders may finance your purchase, but be prepared for stricter terms. That could be larger down payments or higher interest rates for foreign borrowers.

Buying in a foreign currency also means you’ve got to worry about exchange rates. A weaker Aussie dollar can make your purchase pricier or shrink returns when you convert the rent back to AUD. You could definitely soften this impact a bit by borrowing or just keeping the funds in the local currency, but always budget a buffer for currency swings.

Handling Taxes and Legal Hurdles

It’s critical that you understand some of the tax implications and legal processes that are involved when purchasing property abroad. Many countries charge stamp duties or transfer taxes on real estate purchases, plus ongoing property taxes. Some even add surcharges for foreign buyers, so you naturally need to budget for some of these extra costs.

Then consider Australian taxes. If your overseas home is an investment property, the ATO will tax your foreign rental income just like rent from an Australian property (with credits for any tax paid overseas). 

But if the property runs at a loss, you may be able to deduct it under Australia’s negative gearing rules, and any capital gain on sale will be taxed back home. In short, the tax man wants his cut whether your place is in Melbourne or Madrid.

And then on the legal side you also need to be prepared for a different buying process. You might need to:

• Hire a local lawyer or notary
• Get documents translated
• Obtain special ID numbers to buy as a foreigner

Tenant and property laws can also differ quite a lot. For example, some European cities cap rent increases and limit your returns on rental properties. So just stay aware of the local regulations so you don’t get caught off guard.

Managing Your Overseas Property

Finally, owning a home abroad means becoming a long-distance landlord or caretaker. Managing maintenance and tenants from afar is challenging – even a simple leaky pipe can turn into a major hassle when you’re thousands of kilometres away. 

That’s why it’s so common to see people hire a local property manager, especially if you plan to use the home as a rental property. A good manager can handle tenants and repairs, but you’ll need to budget for their fee and trust them with your asset. 

And then even with their help you could still have a bunch of random emergencies from a different time zone that you’d need to deal with.

Try to visit the property (or have someone inspect it) before you fully commit. Then after the purchase, it doesn’t hurt to visit it occasionally to ensure the home is being maintained as expected. 

Stay in regular contact with your property manager or neighbours so you hear about any issues quickly. 

How Upscore Can Help

One way to make your journey easier is to get your finances in order upfront. Upscore’s Finance Passport can streamline the mortgage process when you buy property abroad. It lets you use your Australian financial history to access home loan offers in multiple countries.

You can apply for non-resident mortgages online and compare rates from various lenders – all before you even hop on a plane and for free!

Sign up for Upscore’s Finance Passport today!

How to Buy Property in France as a Non-Resident

Wondering how to buy property in France as a non-resident? Australian citizens (or any other non-residents) don’t actually face any special restrictions – you can purchase French real estate with essentially the same rights as French citizens. 

So foreign buyers can have full property ownership rights and can invest in French real estate just as locals do. That said, being a non EU citizen does mean you have a few extra steps you need to think about, like visa rules for long stays and potential differences in the mortgage process. 

But when it comes to the buying itself, France welcomes international purchasers, and the process is broadly similar for locals and foreigners. Let’s look at this in a bit more detail:

The Process of Purchasing Property in France

There’s a clear property purchase process in France for non-residents, but it will probably feel a bit different from what you’re used to in Australia. Here’s a walk-through of the main stages, from hunting for a home to completing the sale:

Finding The Right Property And Making An Offer

Most people start their search online and look through French property portals and estate agency websites. Once you have a shortlist, you’ll want to get in touch with a local real estate agent (an agent immobilier) early on. 

France’s realtors not only help you locate suitable homes, but also guide you through the buying steps, which is invaluable if you don’t speak French fluently. In fact, because the process will be conducted in French and involves local paperwork, a bilingual agent who’s used to foreign buyers is almost a necessity since it makes your life so much easier. 

Your agent will arrange viewings and, when you’ve found “the one,” help you negotiate the terms and property price with the seller. The negotiation process in France is similar to elsewhere: you and the seller haggle (often via the agents) until you agree on a purchase price that works for both parties. 

And don’t be afraid to offer below the asking price – in a cooling market, sellers may be more flexible. Once a price is agreed, things start moving quickly into the contract stage.

Signing The Initial Contract (Compromis De Vent)

The first major document is the initial contract known as the Compromis de Vente. This is essentially the preliminary sales agreement between buyer and seller. It lays out things like:

• The agreed price
• Property details
• Any conditions (for example, if the sale is contingent on you getting a mortgage)

You’ll usually sign this initial contract with a French notary (notaire) there or sometimes just at the estate agency. French law builds in a 10-day cooling-off period after signing. This is your last chance to withdraw from the contract without any kind of penalty.

So after those 10 days, the contract now becomes binding and you’ll need to pay the deposit, which is usually around 10% of the purchase price. This deposit will be held in escrow (often by the notary or agency) until it’s been completed. 

The Compromis de Vente is one of the main milestones of the whole agreement as it means both parties are committed to the deal (with some escape clauses for things like mortgage denial) and kicks off the due diligence process.

Due Diligence And Paperwork

So there are usually a few months of waiting before final completion after the Compromis. And during this period, various checks and paperwork are completed. As the buyer, you’ll want to ensure the property is in good order and that there are no legal surprises. 

French sellers are required to provide a Dossier de Diagnostic Technique (DDT) – a pack of official property surveys and certificates covering everything from lead paint and asbestos to termites and energy efficiency. This dossier de diagnostic technique is there to inform you about the property’s condition and any issue; it’s often reviewed with the help of your lawyer or agent. 

Your notary will also conduct title searches to verify the seller has clear ownership and to uncover any mortgages or easements on the property. And if any conditions were stipulated (such as obtaining planning permission or a mortgage approval), those also need to be sorted during this phase. 

It’s generally also a good idea to hire your own surveyor if you want a more detailed inspection, especially for older homes – remember, French houses can be centuries old, so an expert look at the structure and roof can do you a favour later. 

This is the time to ask questions and get documents translated if you don’t understand them – French bureaucracy can be paperwork-heavy.

Final Contract And Completion

The last step is signing the Acte de Vente (also called the acte authentique), which is basically just the final deed of sale. This is the moment you actually become the owner of the property. 

Completion usually takes place at the notary’s office. The notary (who is a public official responsible for ensuring the transaction is legally sound) will read through the contract aloud – traditionally in French, but your agent or translator can help if needed – and then both you and the seller sign it.

At this stage, you will pay the remaining balance of the purchase price to the seller, as well as settling all the purchase costs and notary fees. It’s also fairly common for foreign buyers to grant the notary a power of attorney to sign on their behalf if they can’t be present in person, so don’t worry if you’re still in Australia on the day. Then once everything is signed and funds are transferred, you get the keys – congratulations!

Taxes, Fees And Registration

In France, the buyer generally needs to pay the majority of the closing costs. These include the notaire’s fees and associated taxes (roughly 7-8% of the purchase price for an older property), plus any legal fees for your own lawyer (if separate) and maybe even a small estate agency fee if it wasn’t already covered in the price. 

The notary fees you pay actually mostly go toward government duties and taxes so only a small portion of that is the notary’s true fee. Additionally, you’ll pay a one-time land registration tax (it’s usually bundled within that 7-8%) to register the change of ownership. 

The notary handles the land registry formalities on your behalf – after the sale, they will file the deed with the French Land Registry (the cadastre) to record you as the new owner. A few months later, you’ll receive an official title document proving your property ownership has been registered! 

All of these costs are typically rolled into the final closing statement, so be prepared for your final payment to include more than just the agreed house price. We’d generally recommend that you budget for around 10% on top of the purchase price to cover taxes and fees to be on the safe side.

How Upscore Can Help

Upscore’s Finance Passport can help you show your financial history to overseas lenders, which makes it way easier to explore mortgage options as a non-resident. It’s a free service and lets you compare multiple lenders so you know you’re getting the best deal. 

Sign up for Upscore’s Finance Passport today!

Moving Abroad: Expectations vs. Reality

There are plenty of people who move to Australia from overseas, but have you ever thought about leaving Australia to live somewhere else in the world? You definitely wouldn’t be alone – over half a million Australians now live abroad. 

But how exactly does that dream of moving abroad compare with reality? Let’s unpack some of the more common assumptions Aussies have about expat life and see what really happens once the plane lands and you’re left to your own devices.

Cost of Living: Expecting Cheap, Meeting Reality

Expectation: Life will be cheaper overseas – no more “Australia tax” on everything.

Reality: It’s a bit mixed and definitely isn’t always the case. Australia is indeed expensive, no one is denying that. But we also have high wages to match. 

Move to a place with lower salaries and, even if groceries or rent are cheaper, you might feel a pinch in a few other ways. For instance, Australia’s overall cost of living is about 10% lower than London’s, so an Aussie arriving in the UK may be shocked when a pub meal or flat rental costs more than it did back home. 

Needless to say, things definitely get a bit more affordable when you go further up north, but even cities like Manchester have incredibly high costs of living. Obviously, this is assuming that you’re planning to emigrate to an English speaking country, which is why we’re focusing on England at the moment.

On the other hand, some things definitely are a bit cheaper abroad – Brits usually get lower supermarket prices than Australians (thanks to the shorter distance for imports around Europe, for example), and many Asian countries have bargains when it comes to street food and transport. 

But in short, “cheap” and “expensive” will flip around depending on where you go. As a result, you’re just going to have to learn how to adjust your budgets.

Cultural Adjustment: More Than a Holiday

Expectation: Moving abroad will feel like a permanent vacation. Same language and similar culture means an easy transition.

Reality: Once the honeymoon phase passes, daily life overseas has the same chores and challenges as life at home – just in a different setting. Obviously, it’s still a fairly exciting prospect to move abroad, but you’re not going to be able to run from your problems entirely. You’ll still have to commute to work and pay your bills, only now you’re figuring it all out in unfamiliar surroundings. 

Even in another English-speaking country, you’ll stumble over little differences. Australians are famously informal, which could definitely raise a few eyebrows in more emotionally reserved cultures like in England. 

Adapting basically just means letting go of the “holiday” mindset and trying to embrace a new normal. It’s not our goal to sound too pessimistic and cynical about this whole journey. The good news is you’ll also discover new delights – perhaps a local bakery you love or a new sport you take up – that become part of your routine. You just need to appreciate that it’s not a holiday; it’s just everyday life, but with different buildings and weather.

Housing & Space: A Reality Check

Expectation: Housing will be easier or cheaper overseas. Maybe you’ll get a bigger place for less than you paid in Sydney.

Reality: Think again. Australian homes are actually among some of the world’s largest – on average about three times the size of UK homes – so moving into a London flat or Tokyo studio can be a fairly big shock to your system. 

You might swap a backyard and garage for a tiny balcony (or no outdoor space at all, which is fairly common in England). Even if property prices abroad seem lower on paper, exploring the market as an outsider isn’t exactly simple – especially if you’re going to a non-English speaking country. 

Renting can come with unfamiliar rules (like needing a local guarantor or extra deposits), and buying property is notoriously a frustratingly bureaucratic process. Be prepared for plenty of paperwork – translating documents and proving your financial credentials in a new system – to get a mortgage approved overseas. 

It’s all doable, but it certainly isn’t the effortless process you might expect. You’re definitely going to have to be a bit patient while you’re hunting for that new home away from home.

Community & Friends: Starting from Scratch

Expectation: You’ll instantly make friends and feel at home, and locals will love your Aussie charm.

Reality: Building a social circle from scratch is harder than it looks. In the first weeks abroad you might feel like the odd one out – your lifelong mates and family are thousands of kilometres away, and you might be friendly with co-workers or neighbours but probably aren’t going to feel immediately close. 

The Australian accent, for better or for worse, is definitely somewhat of an ice-breaker, but turning small talk into real friendship is something that takes time. We all take for granted how easy it was to make friends when we were back in school; it isn’t always as easy when you’re an adult.

Many expats find themselves seeking out other Australians or at least English speakers for a bit of familiarity. There’s no shame in that – joining an expat meetup or social group can quickly connect you with people who understand what you’re going through. 

Over time, you will break into the local scene too, especially as you learn the culture (and perhaps the language if you’re moving somewhere nearby in Asia, for example). Again, the key is just putting yourself out there and being patient. 

Bureaucracy & Healthcare

Expectation: Paperwork will be straightforward, and my health needs will be covered just like in Australia.

Reality: Every country has its own heap of rules and admin, and you often don’t realise how smooth things are at home until you’re dealing with a foreign bureaucracy. Setting up bank accounts or driver’s licences can turn out to be a whole ordeal. 

Some places are infamous for red tape – and often for good reason. Even in efficient countries, you’ll likely come across forms and processes you’ve never heard of. And when it comes to healthcare, don’t assume you’re automatically covered. Australia’s Medicare safety net doesn’t travel with you. 

While countries like the UK have public health systems with the NHS, the reciprocal healthcare agreement we have only covers basic emergency treatment and leaves out a lot. In many destinations (especially those without universal healthcare, like the United States), private health insurance is a must to avoid huge bills. 

So, make sure you do your homework on local requirements and get proper coverage. You wouldn’t want to be massively out of pocket from some random illness or from a bit of paperwork.

How Upscore Can Help

If you’re an Australian planning an international move, one way to ease the transition is to get your finances sorted early. Upscore’s Finance Passport can help by using your Australian financial history to let you compare and even apply for mortgages in multiple countries online. It simplifies remote property financing across borders, so you can explore your options with far less hassle. 

Sign up for Upscore’s Finance Passport today!

Property Investing 101: Your Guide to Buying New Land

Buying an empty block of land was probably not the first idea that came to your mind when you decided you wanted a property investment. For many Australians, property investments usually involve a house with tenants or a shiny apartment in the city. But there’s another side of the properties investment that you should think about: land. 

If you’ve ever looked at a patch of earth and imagined what could be built there, you already understand the appeal of property as investment in its rawest form. Obviously, it’s basically just dirt right now – no house, no rent coming in – but that’s exactly what makes it a blank canvas. 

With a bit of patience and vision, purchasing new land can be a fantastic investment. You’re looking at a piece that is essentially a property to invest on your own terms down the track. 

Learn more about how you can go about doing this in this article.

Why Invest in Land?

Let’s take a look at some of the major benefits and a few of the drawbacks:

Pros

Low Maintenance

One big plus with land is how low-maintenance it is. With no building on it, there aren’t going to be any leaky taps or repair bills – you pretty much just let it sit and (hopefully) appreciate over time. 

Low Holding Costs

The holding costs are low too: you’re not paying much in property taxes or insurance on an empty lot. And because vacant land usually costs less than a house, it gives a much lower entry point if you’re on a tight budget. 

Many people buy a block now and build later so they aren’t getting priced out of the property market when prices end up rising.

In fact, well-located land is a finite resource – as areas develop, an empty plot tends to become more desirable (they’re not making any more of it, as the saying goes). Unlike a house that gets old and needs repairs, the land itself won’t deteriorate – if anything, its value usually grows as the surrounding community expands. 

And if you decide to build in the future, you have the freedom to design exactly what you want on your land rather than being stuck with someone else’s layout. We’ve seen how limited supply can drive up land prices in some regions; for example, in Victoria a slow release of new lots over recent years has pushed prices higher due to pent-up demand.

Cons

Now for the slightly less exciting side of buying land:

Not Always Predictable 

It shouldn’t exactly be a surprise to learn that land investment usually requires a bit of patience. Values often inch up slowly year by year. But sometimes all it takes is one change – say a rezoning or new highway – for a quiet paddock to jump in value. 

Some investors deliberately buy on the fringes (a strategy known as land banking) hoping for that kind of development boom down the line.

The downside is that an empty block won’t pay you any rent in the meantime. You still have to cover expenses like council rates, maybe land tax, and loan interest out of your own pocket. 

That can add up, so make sure you can afford to hold the property long-term (smart investors even use negative gearing tax benefits to offset these costs). On the plus side, you might find creative ways to get a bit of cash flow from the land while you wait – for instance, leasing it out for parking or farming can help offset some costs. 

Banks also tend to be stricter with loans for vacant land – they consider it a speculative purchase and might require a larger deposit or stronger finances before approving a loan.

What to Consider Before You Buy

Doing your homework on the land is crucial. Location still matters a lot. A block way out in the sticks might be cheap and tempting at first glance, but land closer to towns or growing suburbs is more likely to gain value and is easier to sell or finance later – common sense.

If you’re planning to build a home or start a business on it eventually, make sure the area suits that – for example, a family home will benefit from schools and shops nearby.

Local Regulations

Always check the zoning and local regulations next. Verify that you’re allowed to build what you intend on the property. Some land is zoned only for farming or commercial use and not for residences, and some neighbourhoods allow only single-family houses (no apartment blocks). You don’t want to buy land thinking you can put, say, a workshop or a second house on it, only to find the council rules won’t allow it.

Future Prospects in the Neighbourhood

Also look into any future plans for the area. Is a major road extension or new subdivision planned that could affect your block? Those kinds of projects can either boost land value or give you massive headaches, depending on what they are. 

Local councils can tell you if any new highways or shopping centres are slated nearby, so you know what’s coming down the track.

Accessibility

Banks and buyers also care about access and services. Make sure the land has a proper road entrance – otherwise you might need to negotiate access via a neighbour’s property. Ideally it should have basic utilities available or at least nearby. 

If the block is off-grid with no power or town water, find out what it takes to get those set up. You might have to pay for electricity poles or install a septic system for sewage – costs that can add up quickly. Not always what you’ve got in mind when you’re thinking “I might get into property investment”. This is a big commitment you’ve got to be ready for.

The Land Itself

Consider the land’s terrain and condition too. A steep or oddly shaped lot might be hard to build on or subdivide later. And if a property’s price seems too good to be true, there could be a reason. 

For instance, it might have been an old landfill or industrial site, which could mean contamination issues. Be sure to read any covenants or other restrictions on the title as well, since they could limit your plans (for example, some estates require you to build within a certain time or to a particular design standard). 

Do your due diligence – talk to the council, maybe get a soil test – so you’re not caught off guard by any surprises.

Final Thoughts

In the end, buying undeveloped land in Australia is about seeing potential where others might not. Again, it’s more of a long-term play rather than a quick flip, but it can be really rewarding to watch your patch of earth increase steadily in value as the years go by. 

How Upscore Can Help

When you’re ready to make your move, having your finances lined up can make all the difference. Upscore’s Finance Passport helps you organise your finances for lenders, so you can get the best loan options without needless delay. Our service is free to use, and it’s designed to make borrowing overseas (or across state lines) feel as smooth as local finance.

Get started with Upscore’s Finance Passport today!

How Does Equity Work When Buying a Second Home?

Are you thinking of getting an investment property, or just want to know how equity works when buying a second home? In simple terms, equity is the part of your existing home that you actually own and not just what you’re borrowing. So it’s market value minus what you owe. 

For example, if your home is worth $800,000 and you owe $450,000 on the mortgage, your equity is $350,000. You can use that equity as part of the deposit on your next property. This means tapping the value already built up in your current home to fund the new purchase. 

Again, that could be for a buy-to-let type property investment or just a house you plan to use as a holiday home, since the mechanics are fairly similar either way. We’re going to break down all you need to know about how this works throughout this article.

Calculating Your Usable Equity

So not all of that equity we mentioned earlier is actually immediately borrowable because lenders usually lend up to about 80% of your home’s value. This means your usable equity is the result of 0.8 x your home’s value – loan balance. 

To use another example, on a $500,000 home with $320,000 owed, 80% of $500k is $400,000, minus $320,000 leaves you with $80,000 usable equity. Lenders like CommBank explain this sort of equation when you’re trying to tap into your equity: a $750,000 home with $400,000 owed has $350,000 equity, but only $200,000 usable (80% of value minus loan). 

This all essentially means that any deposit beyond your equity must come from you. Lenders generally expect about a 20% deposit (often called a “20 deposit”). If your equity only covers, say, 15% of the price, the remaining 5% has to be a cash deposit or savings.

Keep in mind you’ll still need a bit of extra cash for stamp duty and any fees on the second home.  If your usable equity isn’t enough for the full deposit and fees, you must make a cash contribution.

Using Equity to Fund the Second Home

In practice, you’ll be turning that equity into cash either by refinancing or getting a second mortgage. This is also generally one of the more popular ways to buy a second property. A common approach is a home loan top-up: you ask the lender to increase your existing mortgage and withdraw the extra as cash for the deposit. 

Alternatively, you might open a separate investment loan against your current home to get the funds. In any case, you’ve effectively borrowed against your own equity.

After the top-up, your mortgage on the original home has increased – you now owe more. For example, if you buy a $400,000 house using an $80,000 equity deposit, the new loan amount is $320,000, and you pay interest on than $320k just as on a normal mortgage. In other words, you’re still paying the lender interest on that money. 

Effectively, this means you’re taking advantage of the equity in your home to make this purchase comfortably.

Remember, your first home now secures the second loan too. We appreciate that this might all sound a bit complicated, but the main takeaway here is that using equity ties the two properties together financially.

Pros and Cons

So, what are the main arguments for using this method?

Pros

Using equity to buy a second home can be a good idea if you want to move fast. You’re not going to have to save years for a deposit, and a larger deposit can reduce or avoid lenders mortgage insurance (LMI). This can save you thousands in LMI premiums.

Cons

On the downside, you are increasing your total debt. Your repayments are going to get way bigger and make your cash flow a lot less manageable. You’re basically borrowing more money and increasing the amount you owe when you top up, so your bills go up.

Borrowing an extra $80,000 means paying interest on that $80,000 more debt. Also, keep in mind that investment home loans often carry slightly higher interest rates (0.2 – 0.4% more) than owner-occupier loans. 

Some investors even take a short interest-only period on the new loan to improve cash flow, but this means you won’t be building up equity as quickly. Every dollar you borrow via equity is one more dollar of debt you repay at interest.

Investment Property vs Personal Use

If the second home is rented out, the rental income you’re getting from that can definitely help cover the loan. In fact, rental income can give you a steady cashflow, and most of the mortgage interest and other costs on that loan are tax-deductible. You’d also be able to negative-gear any rental loss against their other income. 

On the other hand, if you’re just wanting it as a holiday home for personal use then you’re getting no rental income or tax deductions: you cover all interest and costs yourself. Also, any profit on sale will be fully taxable (since it was never your main residence), so you won’t get the main home CGT break. 

Borrowing Power and Advice

Before you make a decision, check your borrowing power – the amount the bank will lend you based on your:

• Income
• Expenses
• Existing debts

Even with your equity, lenders need to make sure you can actually service two loans. It’s smart to talk to a lending specialist or mortgage broker. Any proper home lending specialist can explain how your equity and borrowing power work together. 

Our service at Upscore also helps you compare home loans and lets you choose the best lender for your needs. And another thing to remember is that interest rates on the new loan will reflect current market levels. 

Just keep in mind that it’s not at all uncommon for lenders to charge a bit more on investment loans, and they tend to have different rules for interest-only or fixed terms. If you need some help sorting these details, a broker or even an online tool can calculate your borrowing power (which, again, you can do with Upscore) and match you to suitable home loans.

Grants and Final Thoughts

Unlike first-home buyers, there’s no general grant for second-home purchases in Australia. The First Home Owner Grant is only for first-timers, and most state incentives are only for specific cases.

So basically, there is no national “Second Home Buyers Grant.” (For example, Queensland’s new co-ownership plan was nicknamed the Second Home Buyers Grant, but it’s really just a shared-equity scheme, not a cash handout.)

In summary, using equity to buy a second home means converting the equity in your existing home into the deposit on another property. If you’re in doubt about how any of this works, get professional advice from a broker or financial adviser.

How Upscore Can Help

Ready to explore your options? Try signing up for Upscore’s Finance Passport. It will calculate your borrowing power based on your income and debts, then show you home loan options from different lenders that match your situation. 

Secure your Upscore Finance Passport now!