Are you eligible for Waived LMI for your home loan?
Lenders are likely to waive the LMI fee if your situation is favorable to them, saving you thousands on your mortgage.
Certain kinds of professionals such as doctors, dentists, lawyers, and others are usually eligible for this waiver. However our expert brokers may also be able to help other borrowers find out how to get a waived LMI home loan through other methods.
Find out if you qualify for Waived LMI
What is LMI?
LMI or Lender’s Mortgage Insurance is an additional premium added to your already existing home loan amount when your LVR (Loan to Value Ratio) is above 80%, i.e. your loan amount is above 80 percent of the property’s value.
Lenders usually charge an LMI premium in order to protect themselves against any losses incurred in case borrowers are not able to pay back the loan amount.
LMI premiums are known to be very expensive, however in some cases, you can still get a home loan above 80% without paying LMI as well, as long as your situation is suitable to the lender. Lenders can give home loans without LMI to borrowers if they belong to a certain type of profession that is favourable to them.
How much does LMI cost?
Your LMI amount depends on the LVR and the loan amount.
For example, if you have saved $20,000 as a deposit for a home loan of $200,000, then your LMI could amount to $5000. Of course, there are quite a lot of factors that affect your premium, such as the lender, loan term, occupancy type, and more.
What is Waived LMI?
Why do some professions qualify for a waived LMI while others don't?
Which professions can qualify for Waived LMI?
The professions that usually qualify for an LMI waiver on their home loans include doctors, dentists, lawyers, sports professionals, barristers, and accountants.
This list varies from lender to lender, and from state to state – for example, some lenders will only consider a waived LMI for doctors, while most lenders would not consider it for engineers.
To find out if your profession qualifies for an LMI waived, please speak to a mortgage broker.
Is there any other way to qualify for Waived LMI?
Even though you may not have the preferred profession for an LMI waiver, you may find that having a good credit score and a good income could persuade lenders to give you a waiver for your home loan.
In general, your minimum annual income must be $150,000 to qualify for an LMI waiver in New South Wales, Victoria, Australian Capital Territory, and Queensland. Similarly, the minimum annual income in Western Australia, South Australia, The Northern Territory, and Tasmania is $120,000.
Please note that this does not always mean that you will qualify for waived LMI.
Can I get my LMI waived even though I don't qualify for a waiver?
One of the requirements for a waiver is that the borrower must have a 20% deposit – if you can wait longer and save a larger deposit, then you could avoid paying LMI on your home loan.
Even if you do not meet the requirements for a waived LMI, you may still be able to convince your lenders to give you some leeway, as some lenders will allow promising applicants a home loan of up to 85% with no LMI.
Your mortgage broker will be the best person to help you frame your situation in a way that is favourable to the lenders in order to get a no LMI home loan.
Should I save up for a higher deposit to avoid LMI, or should I pay LMI?
If it is your first time buying a house, you may probably be wondering whether to wait until you have saved up a big deposit or to pay LMI. However, there isn’t a right or wrong answer to this question.
The real estate market is fickle, and each situation is different from another. For the best choice among the two, you need to make smart judgments and talk to an expert.
Ultimately, if you are worried that your dream property may be sold to someone else in the meantime, or that you may not afford it if you wait too long, it may be a good choice to pay LMI and apply for the mortgage sooner. However, if you save up a higher deposit, there are chances that the lenders will waive your LMI, saving you thousands that could go towards outfitting your new home.
Can I get a more detailed assessment?
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