Money Matters

As soon as you decide you wish to buy property in Australia there are several important financial matters that must be taken into account and planned carefully. Here are our top tips:

1. What is your total budget?

Build a budget including all you will need to spend on your property purchase in Australia, and if moving down under permanently, on your full emigration. Take into account the property costs, the fees that arise as part of the purchase process (such as legal fees, property taxes and currency transfers). If you are emigrating, you will need to include the cost of maintaining your life in Australia once you have made the move (such as mortgage or household bills) as well as ongoing property maintenance. You will also need to consider the cost of visiting the country in advance to view properties and areas; as well as the cost of moving yourself and your belongings to Australia. Make sure you include all of these in your overall budget as early in the process as possible. When buying property in Australia as an international buyer, in addition to the other purchase and post-purchase costs, you will need to factor in the cost of transferring currency from the another country to Australia.

2. How will you fund the property purchase?

Will you get a mortgage in Australia, release equity from your current property, or can you pay in full in cash? If you are taking out a mortgage in Australia, we recommend speaking to a mortgage broker with experience in this area, as there will usually be different requirements for an overseas buyer than there are for residents. For example, you will generally need a deposit of at least 30% to make a purchase. Contact us to speak to a recommended mortgage specialist.

3. Have you factored in all costs?

It is most likely that you will need to transfer your funds into Australian Dollars to make your property purchase, and the most cost-effective way to do this is through a specialist currency company like Halo Financial. We recommend opening a currency account as soon as you have made the decision to move to Australia, as this will give you time to discuss the best strategy to make the most of your money in a continuously fluctuating market. Halo Financial has extensive expertise and numerous tools that can help you with your international payments, for whatever reason, minimising your risks and saving you a significant amount of time and money. You will be able to take advantage of excellent exchange rates and will also not be charged a fee on any transfers above £5,000.

4. Have you considered the effect currency market movements will have on the price of your property?

If you are moving to Australia from overseas, any payments change in value, depending on the exchange rate. So, money you send for monthly bills, or expect to receive in a pension payment, for example, will change from week to week, month to month, as the currency exchange rate moves up and down. You can protect against this risk and make sure all regular trades are automated, so you don’t have to worry about missing a payment. A Regular currency trades plan with Halo Financial will automate payments into your account on a monthly or other regular basis, depending on the timescales you have set. By having a plan in place, you protect any payments to or from Australia and don’t have to worry about the effects of currency market movements.

Speak to a Halo Currency Expert

5. How will you pay the ongoing costs associated with owning a property in Australia?

Once you have moved to Australia, you will need to be able to cover the cost of maintaining your life there - such as bills and mortgage payments, as well as the cost of maintenance and amenities. We recommend settling a regular payments plan with Halo Financial as this will automate payments into your account on a monthly or other regular basis. By having a plan in place, you will then not need to assess how market movements affect any currency transfers that you need to make to keep your life going.

6. Do you have a bank account in Australia?

We recommend opening a bank account in Australia as soon as you can so that you can transfer money there once you are in the position to find and purchase your dream home and set up your new life in Australia. This is a fairly straightforward process; and you don’t even need to be a resident to do it. Due to Australia’s long-term popularity as a migrant destination all of the ‘big four’ banks enable you to open special accounts online prior to emigrating. However, you may find some services are restricted until you activate the account (which usually requires you to present yourself at the bank’s branch in person along with relevant forms of ID). It's a good idea to do this in advance so that you can move money around as soon as you have found your property and can make plans for your Australian emigration.

7. Managing salaries and pensions in Australia

You will need to plan how your salary or pension will reach you if you are using them as income for your life in Australia.

8. Have you planned ahead?

It's so important to make sure you have considered every single financial aspect of your move in advance so that you are well prepared for every single part of your journey.

Salaries and Income Tax

The average full-time salary in Australia is approximately A$78,832. (Source: Bureau of Statistics, 2016)

Income Tax is different for Australian residents and non-residents. The current income tax rates are as follows:

Income Tax Rates for Residents 2018 - 2019

Taxable income	Tax on this income
$0 – $18,200	Nil
$18,201– $37,000	19c for each $1 over $18,200
$37,001 - $90,000	$3,572 plus 32.5c for each $1 over $37,000
$90,001 - $180,000	$20,797 plus 37c for each $1 over $90,000
$180,001 and over	$20,797 plus 37c for each $1 over $90,000

Tax Rates for Non-Residents 2018 - 2019

Taxable income	Tax on this income
$0 - $90,000	32.5c for each $1
$90,001 - $180,000	$29,250 plus 37c for each $1 over $90,000
$180,001 and over	$62,550 plus 45c for every $1 over $180,000

Cost of living rankings

Five Australian state capital cities feature in Mercer’s annual cost of living index, which ranks 207 cities worldwide in order of most expensive by measuring the comparative cost of over 200 items in each location. These items include transport, food, clothing, household goods, the cost of housing and entertainment. This is how the Australian cities ranked in 2015 (the figures in brackets are where they were placed a year earlier):

Sydney – 31st (26th)

Melbourne – 47th (33rd)

Perth – 48th (37th)

Brisbane – 66th (52nd)

Adelaide – 71st (59th)

Australian surfers walking along Bondi Beach

Pensions

Australia offers two chief sources of retirement income – Superannuation and the Age Pension.

Superannuation is funded by Australian employers, who must pay 9.5 per cent of an employee’s ordinary time earnings into a ‘retirement fund’. The type of fund differs for each employer, but must be registered and approved by the Australian government. It is important to note that Superannuation funds are not final-salary schemes, so your income when you retire is dependent on the performance of your funds. It is possible for you to add your money to the fund, in addition to the 9 per cent from your employer.

The Age Pension is funded by taxpayers and paid to you by the government. As of March 2015, the Age Pension was worth maximum of AUD$ 22,365 a year for single people and AUD$ 33,717 a year for couples depending on income. However, in order to qualify for an Age Pension you must have lived in Australia as a resident or citizen for ten years.

Discover More About Overseas Property in Australia