When it comes to Australian banks and how they treat foreign income for expats seeking a loan, it’s important to note that policies can vary between different lenders. However, I can provide you with some general information on this matter:

1. Currency Conversion: Banks typically convert your foreign income into Australian dollars for assessment purposes. They may use their own exchange rates, which may not reflect current market rates. This conversion can affect your borrowing power, as the amount you earn in foreign currency may be different when converted to Australian dollars.
2. Acceptable Currencies: Banks usually have a list of acceptable currencies for income assessment. They may prefer income earned in major currencies such as US dollars, British pounds, euros, Canadian dollars, or Japanese yen. Less common or volatile currencies might be subject to stricter scrutiny or may not be accepted by some lenders.
3. Income Stability and Verification: Lenders typically look for stable and verifiable income when assessing loan applications. They may require a minimum income threshold and seek evidence of consistent earnings over a specified period. This can include providing tax returns, employment contracts, payslips, or bank statements demonstrating a regular income history.
4. Documentation Requirements: As an Australian expat, you’ll likely need to provide additional documentation to support your loan application. This may include proof of identity, evidence of residency in the country where you currently live, and documents supporting your foreign income, such as tax returns, employment contracts, or certified translations if the documents are not in English.
5. Loan-to-Value Ratio (LVR): Foreign income can influence the maximum LVR, representing the percentage of the property value that you can borrow. Some lenders may have specific LVR limits for expats, and the allowable LVR may differ based on factors such as citizenship, residency, employment type (salaried vs. self-employed), and the stability of your income.
6. Lender Policies: Each bank or lender may have its own policies regarding expat loans and the treatment of foreign income. For example, some banks treat foreign income as if it were taxed in Australia for serviceability. Some banks may have specific programs or departments dedicated to expat lending, while others may have stricter criteria or limited options. Researching different lenders and understanding their specific policies is important before applying for a loan.
7. Mortgage Brokers: Engaging a mortgage broker who specializes in expat lending can be advantageous. They have knowledge of the lending landscape and can assist you in finding lenders who are more open to considering your circumstances, negotiating favourable terms, and guiding you through the loan application process.

It’s crucial to note that the above information is a general guideline, and specific policies can vary among lenders. It’s recommended to consult with a mortgage broker or directly contact banks to inquire about their policies on expat loans and the treatment of foreign income. They can provide accurate and up-to-date information based on your circumstances.