This is the ultimate guide to accountant home loans in 2020.
In this new guide I’ll show you:
- What benefits accountants get when it comes to home loans.
- Different bank (and non-bank) policies.
- And some case studies of how accountants have made the most of home loan benefits.
Let’s get started.
Chapter 1: Accountant Home Loan Basics
In this chapter, we’ll cover the basics of accountant home loans.
First, you’ll see why accountants get certain benefits that other professions don’t.
Then, I’ll show you the different lending options.
Step 1: What benefits do accountants get?
It’s no secret that accountants are good with money. And due to this, they’re considered to be low-risk borrowers.
In the eyes of some lenders, combining a high income with a trusted profession makes accountants a great, low-risk borrower.
Their career looks promising and their high income earning potential means that banks positively view accountants.
Due to this, individual banks offer special discounts and interest rates for accountants.
- ✅ No Lenders Mortgage Insurance (LMI). You could save thousands of dollars without these extra expenses. As an idea, for a $650,000 loan with 90% loan to value ratio (a $65,000 deposit), you would otherwise have to pay $24,167 in LMI.
- ✅ Depending on the lender, you may be able to get a better interest rate.
Why is waived LMI a big deal?
Lenders Mortgage Insurance (LMI) comes into play when borrowers have less than a 20% deposit. The lender will put in place LMI as protection should the borrower default on their loan and not be able to pay it back.
LMI can add thousands to tens of thousands of dollars to your loan, depending on the size of it.
So if you’re an accountant, due to being a low-risk borrower, some banks will offer you no LMI loans.
A common strategy we see with accountants, to make the most of no LMI, is that they purchase many low-value properties and fast track their portfolio growth.
What savings will I make on LMI?
As a general idea, you could save anywhere between under $15,000 to $36,000. See Finder.com table below for details.
Step 2: Are all accountants eligible?
So beyond holding the title as an accountant, you will need to fit into two main criteria.
- Industry membership
- Minimum annual income – But not all banks require this!
Starting with job titles, you should be working as one of the following:
- Chief Financial Officer
- Finance Director
- Finance Manager
- Financial Controller
Some variations will be allowed as job titles can vary.
Wait, just because I’m an accountant, does that mean I’m eligible?
Yes and no! There are specific requirements you need to fulfil first.
Some banks are completely ok to waive LMI provided you are an accountant and have the industry membership.
Other banks like St George, CBA and Westpac will need:
- Your income to be a minimum of $120,000 or higher in SA, NT, WA and TAS. Otherwise in NSW, ACT, QLD and VIC earning a minimum of $150,000 to get waived LMI.
- This total cannot include the income of your spouse too (unless they are in the accounting field). However, rental income is allowed.
- If you fall under this income requirement, then your combined income with your spouse and rental income must be minimum $150,000.
What else do I need to qualify?
After income, you will also need to be able to prove you’re a part of the leading accounting associations. You must be a CPA, CA, CFA or FIAA and be registered with:
- Chartered Accountants Australian and New Zealand (CAANZ)
- CPA Australia (CPA)
- Chartered Financial Analyst Institute Australia (CFA)
- Institute of Actuaries of Australia (FIAA)
- Institute of Public Accountants (IPA)
How can I prove my membership?
You can provide your membership with any of the following:
- Receipt for payment of annual membership
- Current valid membership card
- Written confirmation from the listed association
- Practising Certificate
Step 3: How much can I borrow?
A key question for accountants.
How much can you borrow with an accountant loan?
Get ready for the good news. If you qualify in the above criteria, then you will be able to borrow up to 90% of the property value with no LMI.
When it comes to money, up to $2million can be borrowed for a home or investment property.
Finally, if you are an accountant borrowing with a guarantor, you will be able to borrow between 100% to 105% of the property value.
Step 4: How can I maximise my interest rates and discounts?
Not all accountants will get the good news of waived LMI. Or maybe you have a big enough deposit already and don’t need it?
Either way, make the most of interest rate discounts. Specific lenders will offer you discounted interest rates, but the following differences will come into play:
- ✅ Property value and loan to value ratio
- ✅ Total loan size
- ✅ Industry memberships
Chat to Hunter Galloway’s team to figure out which lender provides the best deals for you.
Step 5: How does borrowing as a partner fit into this?
If you are the founder of the company, as opposed to one of 20 partners, the application process will vary. If you are a shareholder, and it is generating over 25% of your income, the standard policy requires tax returns and financial statements. Income under this includes salary, director fees and dividends.
Now depending on the loan type, if you’re applying for a commercial loan, the entire businesses financial situation will be looked at. Yet for a regular home loan application, this won’t be necessary.
How can I show my income as a partner?
As a partner, you will need to show two years worth of tax returns and notice of assessments. If your salary is high enough to service the debt, recent payslips on their own may be enough.
If you are part of a larger firm, you may be able to provide proof of your income using a letter or email from the firm’s Administration Manager. I’ve included a list of these firms in chapter three. Instead of using tax returns and standard documentation, this letter can be used instead.
Case Study: The Accountant Couple
John and Peter are both Accountants (at different firms) who have been working for the past few years. John owns his business, and Peter works for a firm.
They were both renting, and had a 10% deposit in savings but didn’t want to have to pay Lenders Mortgage Insurance.
They found the perfect home for $1.25M and wanted to purchase it – but didn’t want to go down the guarantor home loan path.
Hunter Galloway was able to source 90% No LMI finance for them, meaning they were able to borrow $1.15M towards the home purchase.
- 10% of $1.25M = $125,000 deposit
- $1.15M left owing
Chapter 2: The Right Lender for You
In this chapter, I’m going to show you how to choose the right lender for you.
Each lender provides different interest rates and deals for accountants. So it’s essential to do your research.
In most cases, there are shared similarities we can look for, to help simplify the process.
How to compare home loans for accountants
Firstly, speak to your mortgage broker about how to choose the right loan for you. There can be so many loopholes and small differences between lenders. Chat to someone who knows the industry inside and out. Hunter Galloway can help you with this.
The key points to look for when choosing a lender that’s right for you are:
- ✅ Lenders mortgage insurance: As I said above, as a qualified accountant that meets the criteria, you will be able to borrow up to 90% LVR. Without having to pay LMI.
- ✅ Interest rates: Your interest rates add to your total loan. So a tiny difference can add a noticeable amount of money to your mortgage. See what discounts are available to accountants, because every little bit counts.
- ✅ Home loan fees: These can be a bit of a sting, so always double-check. This is where a mortgage broker comes in handy.
- ✅ Extra features: Keep in mind other features that will make your life easy. This includes additional repayment options, redraw facility and offset accounts.
Which banks offer great deals for accountants?
When it comes to choosing the right lender, understanding their approach to accountants is essential. Often lenders specialise in different property types, and their verification process will change. On top of this, policies will vary too. So it’s hard to give you a simple answer when it comes to choosing the right lender.
Each application is unique. But here is a brief overview of some great lenders that are providing deals for home loans for accountants.
ANZ has just announced that they will be rolling out the 90% LVR deal for accountants and lawyers. Without having to pay LMI.
Of course, you will still need to meet the correct criteria as per the above outline. You won’t need to hold a specific title or role, but you’ll need to have a membership in one of the industry bodies.
If multiple borrowers are applying, the accountant applying must have an equal interest in the value. For example, if two people apply, the eligible accountant must have at least 50% ownership of the interest in the loan.
Only Australian citizens and permanent residents are eligible and the maximum loan is $2.7million.
Bank of Queensland
BOQ Specialist Home Loan offers a specific suite of products for accountants. This includes home loan packages, personal loans, car loans and more.
There are also St George, CBA and Westpac who will do special deals for accountants.
Chapter 3: Considerations around home loans for accountants
Now it’s time to dive into why these considerations around home loans for accountants are so good.
Specifically, I’m going to cover what you need to consider.
…and the firms that qualify for reduced income verification.
Let’s get started.
What are the pros and cons of home loan benefits for accountants?
Let’s take a look at how you can benefit from accountant loans and some of the fallbacks.
- Better interest rates. You’ll be eligible for discounted rates in comparison to standard home loan offerings.
- No LMI for applicants that fit the lender’s criteria.
- These types of loans are restricted by a specific range of lenders. Which means that you may have to compromise on some extras.
Can my firm qualify for reduced income verification?
Yes! If you are a partner at one of the following firms, and borrowing under 80% of the property value. In this case, you will be eligible to provide an employment letter to demonstrate your income if you are a partner…
- Ernst & Young
- Minter Ellison
- Allens Arthur Robinson
- Henry Davis York
- Corrs Chambers Westgarth
- Mallesons Stephen Jacques
- Clayton Utz
- McGrath Nicol
- Grant Thornton
Unfortunately, this isn’t available for all staff of these firms only partners.
Did I miss anything?
Now I’d like to hear from you.
How are you going to dive straight into buying as an accountant?
Will you make the most of no LMI?
Either way, let me know by leaving a comment below right now.