When it comes to providing an interest-only home loan to doctors, you can get a loan of up to 95 per cent of the property price and avoid paying the cost of the lender’s mortgage insurance (LMI).
Not only that but, you can also get significant discounts on interest rates… The reason behind it is simple, as Doctors are high-income earners and usually take out loans for investment purposes.
And to answer your question as to whether you can get an interest only doctor home loan with no LMI?
The answer is YES, you can.
However, there are certain things you have to consider before getting an interest only doctor home loan. Let’s start by knowing what interest-only loans are and how they work.
Interest Only Home Loans
Interest only home loan is a type of loan that allows the borrower to only make interest payments for the first few years without any increase in the principal amount. However, once the interest-only term period is over, they are required to make both principal and interest repayments.
Regulatory authorities in the industry have imposed stringent policies, encouraging banks to slow down on the interest-only home loans. But you can still qualify for it, depending on the following factors:
- ✅ Purpose of a loan
- ✅ How much is the loan amount as a percentage of the property value, and
- ✅ The lender you go for.
Interest only home loans are normally beneficial for real estate investors who want to improve their cash flow and are looking for a buffer period during which they can invest money in building a house or for other purposes.
How Interest Only Loans Works?
When you apply for this loan type, lenders do not take into account the interest-only term period while calculating your borrowing power. For example, if your loan term is 20 years, with 3 years of interest only period, the borrowing power will be assessed on a 17-year loan term.
Since the interest only repayments are small, most banks do not allow fortnightly or weekly payments. Instead, you are required to make monthly interest repayments. Although, you do get immediate cost savings with an interest only home loan in terms of paying small repayment amounts, yet, after 5 or 6 years, you will still owe the same principal amount as you did in the beginning compared to a standard loan.
So, if you are a medical professional who is looking for an interest only doctor home loan, do consider these factors before signing up for it.
No LMI an Interest Only Doctor Home Loan
However, if you are intending to buy an interest only doctor home loan for investment purpose and also get LMI waiver, you can save a lot of money to be invested elsewhere. It will give you a huge cash flow for planned investments in the future. In addition to that, your status of being a medical professional also plays a vital role in getting you a lot of other perks.
It is important to know that naturopaths, medical research scientists, and psychologists are not included in the list of medical professionals for that matter.
Apart from an interest only doctor home loan, you can also choose to go for no LMI loan with discounted interest rates. You can save thousands of dollars if LMI is waived. In fact, with other discounts, such as reduced interest rates, you can save a lot more money.
Home Loan Deals for Doctors
Being a medical professional has its perks when it comes to applying for a home loan. With interest-only doctor home loan, the only advantage you would get is reduced repayments during the interest-only period, but with a standard loan, a doctor can borrow a loan of up to 95 per cent of the purchase price in addition to waiving LMI.
Apart from that, the higher maximum borrowing amount is about $4.5 million for residential as well as investment properties and they get special discounts in the form of fee waivers and reduced interest rate.
To be eligible for the doctor home loan, you are required to be a member of an association, such as Australian dental association (ADA), Australian dental council (ADC), the Royal Australian College of General Practitioner (RACGP), and more.
Next steps for Doctors looking for Home Loan options
Our team here at Hunter Galloway is here to help you buy a home. Nathan & Joshua Vecchio are Senior Mortgage brokers who specialise in making your home journey easy.
Unlike other mortgage brokers who are just one person operators, we have an entire team of experts to help make your home loan journey as simple as possible.
Please get in touch here and we can book a time that suits you – either a phone call information session or a face to face meeting.