- iceripMember@iceripJoin Date: 2005Post Count: 2
Could someone tell me why Australian citerzens take loans with NZ banks to buy NZ residential IP when interest rates are lower in Australia.
I am a NZ and Australian citerzen living and working in Australia and interested in buying IP in NZ.
Could someone inform me on the benefits and negatives with useing Australian banks and NZ banks in my situation.
iceripMobile MortgageMember@mobile-mortgageJoin Date: 2003Post Count: 913
The main reason is because Australian lending institutions will not except NZ property as security over finance, where as a NZ lending institution will.
However, providing you have the required amount of equity in Australian property you could finance with an Australian Bank and use the funds to purchase NZ investments outright,
However this method of finance will eventually eat up all your available equity in your Australian portfolio, while the NZ investments would be unencumbered, this may seem appealing but the majority of investors use the equity in property to fund and expand there investment portfolio.
Most of my clients use the equity in there Australian investments to the fund the 20% deposit required for NZ finance,
in doing so, this allows them to stretch there Australian equity/deposits further and acquire more NZ property. I hope this helps Cheers.
PLEASE note comments made should not be taken as specific taxation, financial, legal or investment advice.CastleDreamerParticipant@castledreamerJoin Date: 2003Post Count: 288
another reason to consider why an investor would take finance in the country of purchase (NZ) is the lessening of exposure to currency fluctuations.
If the lending is in the same currency as the property being purchased then a move in AUD/NZD relationship has less impact. By taking only the 20% deposit plus costs from Australia you only expose 20% of your ‘property value’ to the currency transfer….
NZ Investor and Property Spotter