Unfortunately, nurses do not qualify for the same discounts that doctor’s do, as they do not fall into the category of low risk employees because they are not as highly paid as doctors. However, you can save off the lender’s mortgage insurance (LMI) if you are able to show a consistent flow of income and a stable employment as a nurse. There are some lenders who also offer a discounted interest rate if the loan amount is over $250,000 or you sign up for a professional package.
How Much Can a Nurse Borrow?
The following are different thresholds for nurses when it comes to borrowing:
- 80 percent of the Property Price – If you borrow 80 percent of the total value of a property, you may not be required to pay LMI. But you will need to show a deposit of 20 percent, for example, you need to have $200,000 as a deposit amount if you wish to borrow $1,000,000 at 80 percent loan to value ratio.
- 85 percent of the Price – Lending criteria will not be strict and LMI will relatively be cheaper, however, if you wish to take a loan of 85 percent of the property price. There are certain cases where banks also waive LMI premium.
- 90 percent of the Price – If you are able to meet the requirements of a lender, you can also get a 90 percent loan to value ratio. For that, you must repay the debt on a timely basis, must have a 10 percent deposit, stable job and income stream, and good credit history.
- 95 percent of the Price – To qualify for 95 percent loan to value ratio, you need to have a reasonable salary, stable job, good credit history, minimal debt, and you should not be purchasing an unusual type of property in a distant location.
- More than 95 percent Loan to Value Ratio – If you go for Guarantor home loans, there is also a possibility of getting a home loan that equals 105 percent of the property value. It allows you to avoid LMI payments and you do not even have to fulfill any deposit requirements.
Maximum Deposit Requirement
You need to have a maximum deposit of up to 5 percent of the property value and an additional 5 percent will be required to meet other costs related to your purchase. The other costs include LMI, conveyancing fee, government fee (stamp duty), etc.
In case of an insufficient deposit, there are other home loan packages as well, including no or low deposit home loans.
Qualifying for Waived LMI
So many lenders consider nurses to be low risk professionals. This is the reason why most nurse practitioners qualify for waived LMI. To qualify for over 80 percent, however, you have to fulfil additional requirements that are as follows:
- The borrowing amount should not exceed 85 percent loan to value ratio
- The loan size should not be more than $1,500,000
- You hold a good credit rating
- You have a stable job and a reasonable stream of income. Banks give preference to customers who have an annual income of more than $150,000.
First Home Buyer Discount for Nurses
If you are buying a house for the first time, you can get up to 15 percent discount on LMI premium. However, if a financial institution does not deal with such premiums, the discount will not be available. Moreover, you can use the First Home Owners Grant as a deposit for the loan. But you will not qualify for a loan if the deposit is borrowed from another source.
Decreasing LMI Premium
You can decrease the premium amount to a more reasonable level. For example, LMI will be a lot cheaper if you borrow up to $300,000 as it allows you to save around $800. Also, with higher loan to value ratio, LMI will be costly. You will have to bear a cost of over $1,000 if the loan is even $1 over 90 percent or 95 percent.
Furthermore, LMI policies vary from one lender to another. Therefore, before you apply for a loan, speak to our team so that you can make an informed decision. Always compare different loan packages available in the market in order to find the best deal.
Call Hunter Galloway now on 1300 088 065 or email Joshua.Vecchio@HunterGalloway.com.au for more information.