Navigating the world of home loans can be complex, and one term that often causes confusion is Lenders Mortgage Insurance, or LMI.
LMI is a one-off insurance premium that protects the lenders or banks, not you, in case you default on your home loan. It’s typically required when you have a deposit of less than 20% of the property’s value. The cost can be significant—often thousands or even tens of thousands of dollars.
The good news is, for many Australians, there are ways to avoid paying LMI altogether!
We’re reaching out to let you know about three key opportunities that could help you buy a home sooner and save you a significant amount of money:
1. LMI Waivers for Professionals
Certain professionals are considered lower risk by lenders due to their stable, high-income careers, education. As a result, some banks offer LMI waivers, allowing you to borrow with a smaller deposit (often as low as 5% or 10%) without paying LMI.
Professions that may be eligible include:
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- Medical Professionals: Doctors, Dentists, Vets, Pharmacists, and Registered nurses.
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- Legal Professionals: Lawyers and barristers.
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- Accountants: Chartered Accountants (CA) and Certified Practicing Accountants (CPA).
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- Other high-income earners in specific industries.
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- Other Professions: Defence, Firefighters, Police, Teachers, Surveyors etc.
If you are in one of these fields, this could be a game-changer for your home-buying journey. Please note some lenders offer this for properties for principal place of residence while others offer for investment purposes as well.
2. Government-backed Schemes for First Home Buyers
If you’re a first home buyer, you might be eligible for a government scheme that helps you buy a home with a small deposit, while the government guarantees the loan, meaning you don’t have to pay LMI.
The Home Guarantee Scheme (including the First Home Guarantee, Regional First Home Buyer Guarantee and Family Home Guarantee) allows eligible first home buyers to purchase a home with a deposit as low as 2% – 5% without needing to pay LMI.
Eligibility criteria for these schemes apply, including income caps and property price caps, and they are released in limited numbers each financial year.
3. Special promotion loans – available to any profession
We have access to few lenders who offer No LMI loans when you borrow 85% – 90% of the value of property without any LMI. Please note lenders may charge slightly higher rate than their standard product due to the risk they are taking.
Don’t leave thousands of dollars on the table
Whether you’re a professional looking to leverage your career or a first home buyer seeking a leg up, these policies could be your ticket to home ownership.
Finding the right loan and navigating the specific criteria for LMI waivers or government schemes can be tricky. As your mortgage broker, my role is to help you understand your options and find the best solution for your unique situation.
Ready to see if you qualify?
Let’s have a quick, no-obligation chat to discuss your options. Here at Draw Equity we can assess your eligibility and help you get started on your home ownership journey with confidence.
We look forward to helping you achieve your financial goals.
