How mortgage brokers are helping migrants pursue the Australian dream

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Australia’s net migration rate has historically been one of the highest in the developed world, with the population growing by almost 1% per year in the decade leading up to the pandemic.

The idea of ​​home ownership, the Australian Dream of the Hills Hoist on the quarter acre block, is at the heart of integration and becoming Australia, and the goal of millions of new migrants who have come to Australia in recent years.

For brokers, being able to interact with this community is vital and understanding the unique situations many have – both in terms of where they are from and what they do in Australia – is crucial to getting the most out of it. party of opportunities.

With that in mind, Australian Broker spoke to two experts who primarily deal with migrants and their unique circumstances.

Wally Ayad is Managing Director of Mortgage Providers, a brokerage firm based in Bankstown, and of Ijarah Finance, an Islamic finance firm that provides halal compliant loans to Muslims. Chris Zhang is a finance specialist and mortgage broker at MoneyQuest in Burwood, VIC.

“Most of our clients are from non-English speaking backgrounds (NESBs), a mix of the Indian subcontinent, the Middle East and South East Asia. There are also quite a few children of migrants, ”Ayad said.

How brokers can make the Australian dream come true

“What you will find with people is that there is a tendency to help each other, especially parents and siblings, there are a lot of gifts and family guarantee offers to help them. to enter the real estate market. There is encouragement from family and family units to help other family members buy property.

“There is a massive rush in the real estate market right now, not just in Sydney or Melbourne, but nationwide.”

“We run a side business, not Islamic finance, called Mortgage Lenders, which has been around for 18 years. The level of Islamic finance inquiries from a non-English speaking background is significantly higher than the inquiries from our mortgage providers. “

“There is a great movement from these communities to enter and solidify in the real estate market. Even with several properties: I have some that are up to their 10th property and more.

The importance of property in Chinese communities cannot be overstated, said Chris Zhang.

“The Chinese think that property is one of the biggest investments of their entire life,” he explained. “It is like that in Australia, but the Chinese consider property to be the most precious thing in their life, pretty much, other than their family and their children.”

“Home and family are roughly equal. If you don’t have a safe place to stay that is theirs, they probably won’t have a happy family. The last thing they want to default on is a mortgage. They don’t want to lose it, because it’s so important.

Helping Chinese Real Estate Investors Understand the Australian Market

“When they come to buy a property here, they are happy to sell a property in China and come here and buy a place in Australia. They will spend their savings in China to find a property they want to stay in to make their families happy.

Finding loans for clients with an immigrant background naturally poses specific challenges. For Wally Ayad clients, this often convinces them that Australian financial institutions are strong across the board.

“With our brand of non-Islamic finance mortgage lenders, you find a lot of people with NESB who were born overseas, and they prefer the big brands,” he said.

“They trust CBA, they trust Westpac. Because they’ve been around for a long time and have a good brand. Even though they have a hunch that they may not have a good grasp of everything, they understand that the financial institution will be working in their best interests. The Big Four won’t rip them off.

“When you encourage them to go to a lender they haven’t heard of, a small bank, or a credit union, they get shy. They say ‘where I’m from, you don’t trust people like that, they’re not big enough’. In Australia, they will trust the big institutions.

“Sometimes it’s because the parts of the world they’re from, the financial order may not be as well structured as Australia.”

Independent migrants struggle to make Australia’s dream come true

For Chinese customers, buying a home is a huge movement for the family and other aspects of it are involved.

“Back in China, it is very important to consider the school basin,” said Chris Zhang. “In Beijing and Shanghai, properties near good schools are so expensive. It’s five to ten times more expensive than Australia.

“If a wealthy family moves from China to here, they want to buy a property and will invest more than the locals because they think it’s cheap.”

“They invest money in their children, in a school zone like Glen Waverley or Doncaster in Victoria. That is why there is a Chinese community in this region. Compared to what they pay in China, it’s cheap.

Ayad deals with both traditional finance and Islamic finance, which circumvents a ban on Islam around interests. Its clients also face challenges in understanding the system and the nature of the work in which they tend to be.

“With Islamic finance, a lot of them understand what interest is, and they understand how finance works in general, but they don’t have a good grasp of the technical terms,” Ayad said.

“Both conventional and Islamic: you find that even Muslims do not understand Islamic finance correctly. There is a general lack of education on what financial instruments are, how they are used and how they are applicable.

“Along with migrant communities, there are a lot of them in the SME sector. Proof of savings can be difficult, and there are traditional ways to save where they save at home or with the family. There are a lot of gifts parents give to children: they will give them $ 100,000, but there is a good chance that they initially saved this money with their parents. Their parents took this money from them as savings.

“There are internal family co-ops, which can be circles of hundreds of thousands of dollars that the family has also contributed, and they share it among their relatives. “

Islamic finance, migrants and the Australian real estate market

“They say, ‘You need that $ 200,000, so we’ll give it to you,’ and that money is replenished over the months, and then they give it to the next parent. You see these family communities are very common in communities in Southeast Asia, Indonesia and Malaysia. I’ve seen that a lot.

Chinese customers tend to have the same issues with self-employed workers, as well as the different culture of borrowing and security in China.

“As a broker, I find that Chinese clients are often wealthy enough to buy property directly,” Zhang said. “In Chinese culture, the old story was that if you had something that wasn’t crowded, you could give it away as a loan and they would give you the money. “

“Here, income is more important for a mortgage and some do not understand it. They think that because they have a property worth $ 5 million, they can borrow $ 1 million from the bank. It’s a cultural difference they face, especially new migrants.

“I have to educate them and explain to them how it works in Australia. They need to have a stable income to pay off a mortgage and get money. “

“Obviously, then you’re talking about paying off a home loan, there are a lot of self-employed people. I deal mainly with self-employed people, so I have to tell them how to pay taxes properly so that I can borrow more money to buy more properties.

Read more: ABC changes loan criteria for self-employed workers

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