How to avoid pay LMI for Professionals
- Kate JI
- Aug 4, 2024
- 2 min read
Great news for professionals in the accounting, finance, legal and medical industries. There are number of banks or lenders are currently waiving the Lender’s Mortgage Insurance (LMI) for borrowers in the above fields.
What is Lender’s Mortgage Insurance (LMI)?
Lender’s Mortgage Insurance is an insurance policy that you pay for, that protects the lender. As a rule of thumb, banks or lenders will charge the LMI policy premium if you put down less than 20% deposit of the property value. Any time you borrow more than 80% of a property’s value – or have a Loan to Value Ratio (LVR)) of 80% or higher, the lender will require you to take out Lender’s Mortgage Insurance (LMI).
LMI is usually charged as a one-off premium, and it can be capitalized (i.e. added) to the loan amount. Most borrowers usually take advantage of this, so they are not out of pocket. This can add thousands of dollars to the final loan amount.
What is the LMI waiver policy for professionals?
If you are working in certain professions, a number of banks or lenders are willing to waive the LMI premium for you. These lenders may lend without charging the Lender’s Mortgage Insurance (LMI) fee if you have between 5% to 20% deposit depending on certain qualifying criteria.
Who is eligible for the LMI Waiver policy?
Lenders may waive the LMI for accredited professionals in the following industries:
Accounting & Finance – e.g. Accountants, Actuaries & Financial Controllers
Legal – e.g. Solicitors & Judges
Medical – e.g. GPs, Specialists, Surgeons, Dentists, Vets, Optometrists, Chiropractors & Physiotherapists
How much LMI fee can I save?
For a property worth about $600,000, a borrowing of up to 90% LVR equates to a $540,000 loan amount. This will attract an LMI fee of around $11,772 depending on the lender.
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