Australian Dollar Mortgage

Overview

The Australian dollar (A$ or AU$) is the currency of the Commonwealth of Australia.

The Australian dollar is currently the sixth-most-traded currency in the world foreign exchange markets behind the US dollar, the euro, the yen, the pound sterling, and the Swiss franc, accounting for over 6% of worldwide foreign-exchange transactions. This currency is backed up by comparatively high interest rates in Australia, the relative freedom of the foreign exchange market from government intervention, the general stability of Australia's economy and political system, and the prevailing view that the Australian dollar offers diversification benefits in a portfolio containing the major world currencies.Australia being located where it is, also offers to its currency great exposure to Asian economies and the commodities cycle.

It is interesting to note that for decades, Australia's balance of trade has depended primarily upon commodity exports such as minerals and agricultural products.This in turn has affected the value of its currency which tends to rise during global boom and slump when commodity prices fall. It can therefore be said that the Australian Dollar moves generally in opposite direction to other major currencies which become more popular during slumps as traders move value from falling stocks into cash.

This high volatility and unorthodox movement in exchange rates has contributed to the AU$'s status as one of the most traded currencies in the world.

Mortgage

An Australian Dollar denominated mortgage can be arranged for NON AUSTRALIAN RESIDENTS  & EXPATRIATES when the property is located in a country whose currency is the Australian Dollar or when the borrower earns in Australian Dollars.

The current Australian Prime Rate used as a base for mortgage lending is 3.75%. Thereafter a variable margin, typical 1 - 3% is added to such rate to give the paying mortgage rate. Such margins may vary with the country  where the property is located and its loan to value ratio

Rates can be variable, tracker or fixed and the maximum ratio of loan to value that may be obtainable from lenders is 80%. Conditions may apply.  

The granting of such mortgage may however be limited to a minimum amount, typically 180,000AU$.

Capital and Interest Only mortgages are available with an Australian Dollar denominated mortgage. In some cases an all Interest Only mortgage may be 0.2% higher than a Capital Repayment equivalent.

Switching

IMPORTANT:

In AUSTRALIA, CANADA, DUBAI, FRANCE, HONG KONG, NEW ZEALAND, PORTUGAL, SINGAPORE, SPAIN, UNITED KINGDOM (also) and UNITED STATES, The Mortgage Explorer Ltd can offer a switching  facility where a dual currency loan is granted. There are 2 free currency switches, offered per calendar year and a fee of USD150 per switch applies thereafter.

We consider such facility to be of utmost importance especially at times of great uncertainty in the currency markets. Also when/if a reduction in loan amount has been achieved through the change in exchange rate between  two currencies e.g. the currency where the property is located and the Australian Dollar. 

Please note:

Foreign exchange movements can be sudden and substantial and you must be able to tolerate a sizeable increase in your loan through such movements. At no stage should you expose yourself to high risks of foreign currency borrowings if you are not able to afford the potential losses that could result from adverse currency movements and the higher interest rate servicing costs that would be required of you due to your having a larger loan. Denominating debt in foreign currencies may not be suitable for you. If you have any doubts as to your suitability for borrowing in foreign currencies or your understanding of the risk involved, you should consult your financial adviser. Changes in the exchange rate may increase the equivalent of your debt, in whatever currency you deem important to you e.g. main income's. Your lender will not tolerate too great an increase in your loan as a result of currency losses and may opt to convert the loan back into the lender's specified base currency at a predetermined level. This may result in a permanent increase in your loan which is not fully compensated for by any other benefits. In this event, you could be left paying interest rates on a larger amount of loan than that you originally borrowed.