Are you an Australian expat currently living and working in Singapore or elsewhere around the world? One of the key aspects when it comes to repatriation planning is financing your future home. Whether you’re looking to move into a property you already own, buy a new property, build, or even rent, there are many options to consider.

This blog post will explore four key options you have for financing your future home in Australia upon your return.

Option 1: Buying Your Future Home Before You Repatriate

An exciting option is purchasing your future Australian home before you even leave Singapore. This method allows you to start viewing properties, engage in negotiations, and eventually secure your dream house, all while you're still overseas.

Think of this option as a strategic investment. Until you move into the house, it can serve as an investment property that may yield tax benefits. The Australian government often provides tax deductions for expenses related to maintaining an investment property. These tax losses from negative gearing can be used to offset future capital gains or income tax liabilities, which could prove quite valuable in the long-run.

However, this option has potential pitfalls. The property market may fluctuate, and the value of your investment might decrease over time. Moreover, managing a property from abroad could be complicated, as you'll likely need a property manager to maintain the place and find tenants.

Let's consider the case of John, who purchased a home in Melbourne while still living in Singapore. He was able to use a reliable property manager who took care of maintenance and tenant issues, so when John returned to Australia, he had a well-kept home waiting for him. John was able to accumulate tax losses on the property to offset future income tax liabilities, and also benefited from some capital gains of the property itself.

John was also able to secure the loan based on his Singapore income and overall financial position, rather than having to wait until he was back in Singapore, in which case his borrowing capacity may have been reduced and this may not have allowed him to buy his ideal property.

Option 2: Moving into a Current Property and Refinancing to a Cheaper Rate Owner-Occupier Loan

Perhaps you already own property in Australia. If so, a viable option is moving into your existing property and refinancing it to an owner-occupier loan, which often has a cheaper interest rate compared to investment loans. This option guarantees you a place to live upon your return.

This option's benefits are twofold. You won't have to face the uncertainty of house hunting upon repatriation, and you can enjoy potential savings from refinancing to a cheaper loan. However, this method might limit you to your current property's location, and may remove this as an investment asset in the mix. If you’re planning to move into the property upon your return, you could consider refinancing to an owner-occupier loan prior to your repatriation based on your future cash flow.

For instance, Jane moved back into her existing property in Sydney when she repatriated. By refinancing to an owner-occupier loan, she enjoyed a lower interest rate, reducing her monthly payments. In Jane's case, even before she repatriated, she was able to convert her loan to an owner-occupier rate based on her income in Hong Kong as she was planning to move into the property. If Jane had moved back without a job, she would not have been able to refinance as the loan would have been unlikely to meet the serviceability requirements.

Option 3: Buying Your Future Home as You Repatriate

Another option to consider is buying your future home in Australia around the same time you plan to repatriate. This method could be an excellent fit, especially if you're relocating with your current employer or expect to stay in a similar role.

This approach gives you the flexibility of choosing a home that aligns with your lifestyle and income. Plus, it provides the opportunity to move into your new home immediately upon repatriation.

However, this method also requires a steady income or substantial savings to finance the new property. Additionally, the process can add stress to your repatriation transition, given the whirlwind of activities happening simultaneously. It’s important to plan ahead in this scenario and ensure that your property can comfortably settle without disruption your relocation plans.

Consider Sam's case, who bought a house in Brisbane just as he was repatriating. Since he was relocating with his existing company, he had a steady income that allowed him to get a mortgage for his new home. In this scenario, as Sam didn’t want to rent out the property he was going to move into, it suited him well to avoid having capital tied up before he planned to move into the property. Given that there would be no tax benefits from Sam given that he didn't want to rent out the property, purchasing it upon repatriation made the most sense in his case.

Option 4: Buying Your Future Home After You Return

The final option to consider is purchasing your home after you've returned to Australia. This strategy allows you to find a job and settle down before making a significant investment.

This option gives you the flexibility to choose a house that aligns with your new job's location and the local real estate market. However, the major downside is the uncertainty of job hunting upon repatriation and potential delays in moving into your own home due to job probation.

In this case, you would need to wait on finding a role in Australia, passing any probationary period, and securing at least one payslip and bank statement before you could consider financing for your property.

Let's take the case of Anna, who waited until she had secured a job in Perth before buying her home. She rented a small apartment during her job hunt, and once she was confirmed in her job, she bought a house close to her workplace. In Anna's case, she was able to assess the area that she wanted to live in before purchasing the property. 

Concluding Thoughts

Each of these options has its own advantages and disadvantages. Your choice will depend on your personal circumstances, financial readiness, and future plans. It's crucial to make a well-informed decision to ease your transition and set yourself up for a comfortable life upon repatriation.

Remember, these are just options. Your individual circumstance might be unique, and professional advice can be extremely valuable. Don't hesitate to reach out to experts for personalised advice. Share your thoughts in the comments below or connect with us to explore your options in depth.

Let your new chapter begin on a sound footing by securing the best possible home for your goals. Wishing you a successful repatriation to Australia.

To Your Financial Success!

Jarrad Brown is an Australian-trained and qualified Fee-Based Financial Planner Global Financial Consultants Pte Ltd providing specialist financial advice and portfolio management services to Australian professionals in Singapore. Jarrad Brown is an Authorised Representative of Global Financial Consultants Pte Ltd - No: 200305462G | MAS License No: FA100035-3

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General Information Only: The information on this site is of a general nature only. It does not take into account your individual financial situation, objectives or needs. You should consider your own financial position and requirements before making a decision.

*Please note that Jarrad Brown is not a tax agent or accountant and none of the content outlined here should be taken as personal advice. You should consult your tax agent and financial adviser to review your current personal finances and financial goals to consider whether this strategy is appropriate for you.