5 Awesome Strategies | How can I avoid LMI on my home loan?

Is it possible to avoid LMI on your home loan? Lenders Mortgage Insurance is an insurance that protects the bank, and is required to be paid if you have less than a 20% deposit – unless qualify to avoid LMI.

We look at 5 ways of avoiding LMI.

How much can avoiding LMI save?

As you can see below, having LMI waived could save you up to $34,372 in the costs of purchasing your property!

Purchase Price
Deposit (%)
Deposit ($)
LMI
$500,000
15%
$75,000
$4,725
$500,000
10%
$50,000
$9,860
$500,000
5%
$25,000
$17,655
$750,000
15%
$112,500
$9,033
$750,000
10%
$75,000
$18,173
$750,000
5%
$37,500
$34,372
*LMI amount calculated as the average of big 4 banks, on a purchase in Queensland.

Method 1: Work in a Profession that is eligible to avoid LMI

If you work as an Accountant, Lawyer, Professional Athlete, or Entertainment professional you may be eligible to avoid LMI and have it waived up to 90%.

A full list of professionals includes:

There can also be some additional criteria around income, so speak to our mortgage brokers to see if you qualify.

information-session

Method 2: Medical Professionals are eligible to avoid LMI 

Medical Professionals Get LMI Waived. If you are a Doctor, Dentist, GP, or Specialist you may be eligible to avoid LMI.

  • Anaesthetist;
  • Cardio Thoracic Surgeon; Cardiologist;
  • Clinical Pharmacologist;
  • Cosmetic Surgeon;
  • Dentist;
  • Dermatologist;
  • Ear and Throat Surgeon;
  • Emergency Surgeon;
  • Endocrinologist;
  • Gastro Intestinal Surgeon; Gastroenterologist;
  • General Practitioner; General Surgeon;
  • Gynaecologist;
  • Haematologist; Hepatologist;
  • Immunologist;
  • Nephrologist;
  • Neuro Surgeon; Neurologist;
  • Obstetrician;
  • Oncologist;
  • Ophthalmologist; Optometrist;
  • Oral and Maxillofacial Surgeon;
  • Orthopaedic Surgeon; Orthopaedic Registrars;
  • Otolaryngologist;
  • Paediatric Surgeon (Neonatal/Perinatal);
  • Pathologist;
  • Plastic Surgeon;
  • Psychiatrist;
  • Radiologist;
  • Reconstructive Surgeon;
  • Respiratory/Thoracic Surgeon;
  • Rheumatologist;
  • Surgeons;
  • Urologist;
  • Vascular Surgeon;
  • Veterinarian.

 

Method 3: Look at other lenders to avoid LMI to 85%

Lenders Mortgage Insurance costs vary between different lenders, looking at a $600,000 purchase with a 10% deposit the LMI Costs range from $10,301 to $16,121 – a difference of $5,820!

Bank LMI Costs
Lender A $10,301
Lender B $10,713
Lender C $12,007
Lender D $13,361
Lender E $14,597
Lender F $15,172
Lender G $16,121

But that is not all, there are some lenders in the market that can look at going to 85% LVR without Lenders Mortgage Insurance.

They do have specific criteria around this, including:

Applicant conditions:
  • Satisfactory credit scores apply for all applicants
  • Perfect conduct on all accounts
  • Applicant must be an Australian Citizen or permanent resident
  • All security providers need to be borrowers and mortgagors
  • A minimum PAYG / Self Employed “Qualifying Income” per application (excluding rental income) of $180,000 per annum (only applies to Sydney Zone 1A securities)
Security conditions:
  • Security must be located in Citi Zone 1A or Zone 1B area (Major Metro)
  • Excludes new/ high-density units, rural residential, construction loans and vacant land
  • Maximum one property per development.
  • Any adverse comments or risk ratings in the valuation report is unacceptable.
Loan conditions:
  • Repayment must be principle and Interest
  • Min loan amount $250,000 per security property
  • Maximum per security loan amount depending on property location
  • Max loan exposure not to exceed $1.5 million
  • 0.25% margin applied to all variable rate and fixed rate
  • Minimum $20,000 on variable rate (cannot be 100% fixed)
  • No Cash Out, or Debt Consolidation

chat-to-mortgage-expert

 

Method 4: Save more deposit

If you do save more, you’ll be eligible for a genuine savings discount. This is where you’ll be able to get standard LMI rates rather than the LMI premium rates. This rate is cheaper, so in the long run, you’ll be better off.

 

Method 5: Get a Guarantor to avoid LMI completely

Another option is getting a guarantor, which remove the LMI completely. Do you have someone close enough to you that would be willing to be your guarantor? Guarantees are immediate family members like parents, siblings, grandparents, spouses, de facto partners and adult children. Yet parental guarantees are usually most preferred. The main requirement is that the guarantor is to have sufficient equity in their property along with a stable income.

guarantor-home-loan

Example of a typical guarantor structure

You will also be able to extend your borrowing capacity up to 105% which means that the original, bigger loan now becomes a possibility.

Why not speak to Hunter Galloway today about all of the different options to help make your dream of buying a home, come true.

How does Hunter Galloway help avoid LMI?

It’s important to work with a mortgage broker that understands your situation, and occupation. At Hunter Galloway we have access to over 30 lenders, we do all the paperwork for you, negotiate a better deal with your bank and bests of all our services do not cost anything to you as we are paid by the banks.

how-can-i-avoid-lmi

Hunter Galloway has helped clients like Freny with avoiding LMI

Help this is all confusing

If you are looking to avoid LMI and wanting to buy a home or refinance speak with one of our experienced mortgage brokers to walk through the next steps with you.

At Hunter Galloway we help clients get 90% no LMI Home loans in this competitive market, we give you the actual strategies that have helped other home buyers like you secure a property when there have been 5 other offers on the table! Enquire online or give us a call on 1300 088 065.