The Mortgage Agency
LMI Waiver for Financial Professionals
If you’ve reached the point in your life when you’re ready to buy a home or investment property, being a financial professional could afford you great benefits – such as not having to pay lenders mortgage insurance (LMI).
Most lenders require one or the other: more than 20% deposit or lenders mortgage insurance. As a financial professional, you can potentially avoid both of these things, meaning you effectively save money, and you have the opportunity to buy property sooner than you may have thought.
Why Do Lenders Require Borrowers to Pay Lenders Mortgage Insurance (LMI)?
If a borrower defaults on their mortgage repayments along the line, the lender will repossess their property and use the money to cover their losses.
The problem comes in if the property value decreases. In that case, selling the property won’t make enough money to recover the lender’s losses.
This is why lenders require either a 20% or more deposit (to cover the balance of the loss after depreciation) or lenders mortgage insurance.
If a borrower has less than 20% deposit, also known as a high loan to value ratio, they are required to pay LMI fees which can be around 2% of the home loan value. So, if your home loan is for $900,000, your LMI can amount to $18,000.
If you’re an accountant, actuary or financial analyst (CFA), or CFO The Mortgage Agency can help you save tens of thousands of dollars on your home loan – simply by taking advantage of your profession.
Which Financial Professionals Are Eligible to Waive LMI?
The most common way to achieve an LMI waiver is by putting down a deposit of more than 20%. But that could take a considerable amount of time to save up.
Certain professionals are eligible for LMI waivers because they earn high-income salaries that are stable and consistent.
Many professionals in the financial field may be eligible for LMI waivers, including:
- Chief Financial Officers
- Finance Directors
- Finance Managers
- Financial Controllers
Here’s an example:
Helen is the CFO of a large company and has easily been able to save up $50,000 for a deposit over the last few months. The property she’s interested in buying costs $500,000, so Helen will need to borrow a loan amount of $450,000 .
She calculates her LVR by dividing what she needs to borrow by the property price.
450,000 ÷ 500,000 = 90%
Because Helen has only been saving for a few months, she has a high LVR of 90%. Usually, this would require her to pay lenders mortgage insurance. But, since Helen is an eligible financial professional, she may be able to waive the LMI even though she has an LVR of more than 80%.
Our home loan experts can help you achieve an LMI waiver and avoid this significant addition to your home loan. Contact our team to get started today.
What Other Benefits Come With Home Loans For Lawyers?
Because of your favourable financial position, a mortgage broker may be able to negotiate lower interest rates and other discounts on your home loan. Because you’re an attractive borrower, lenders will be more likely to comply just for the sake of signing you up as a client.
When it comes to refinancing, you can also refinance up to a maximum of 90% of the property value without having to pay LMI. This means you have more access to your home’s equity, and you can use that money to buy more investment properties.
Lenders will also approve home loans for lawyers with a high loan to value ratio, meaning they can pay a smaller deposit without having a guarantor or paying LMI. This means those in the legal profession can become homeowners sooner because they don’t have to take time saving up a sizable deposit.
What Do You Need To Qualify For an LMI Waiver For Accountants and Other Financial Professionals?
1. Financial professionals must be registered with one of the following memberships to be eligible for an LMI waiver:
- Certified Public Accountants Australia (CPA)
- Chartered Accountants Australian and New Zealand (CAANZ)
- Chartered Financial Analyst Institute Australia (CFA)
- Fellowship of the Institute of Actuaries of Australia (FIAA)
- Institute of Public Accountants (IPA)
Evidence of membership can be submitted in the form of:
- Current valid membership card
- Practising Certificate
- Receipt for payment of annual membership
- Written confirmation from the association
Other industry bodies, as well as overseas qualifications, are considered on a case by case basis.
2. Income – certain banks require a certain level of income before this policy and benefit can be applied. Best to speak to us first so we are able to provide you with options.
Why Do Financial Professionals Get These Benefits?
High income earning professionals, such as accountants, are attractive clients for lenders because there’s less chance that they’ll default on their home loans.
These types of professions suffer from little employment volatility, so it’s unlikely that they’ll lose their job unexpectedly and be unable to honour their mortgage repayments.
Additionally, having to study for many years means they’re less likely to spontaneously make a career change and earn less money than before, meaning they would no longer be able to afford their mortgage.
As a result, lenders offer perks such as LMI waivers for qualified accountants to incentivise them and secure their business.
Thanks to your high income and stable job, lenders may even agree to a lower interest rate on home loans for accountants. Remember, a discount of as little as 0.5% will lead to significant savings.
For example, if you want to take out a home loan of $780,000 over 30 years with a 20% deposit and an interest rate of 3%, your principal and interest total will amount to $1,183,864, with the interest alone being $403,865.
If you have a mortgage broker on your team to negotiate a rate of 2.5% instead, your interest payments will drop down to only $329,500 over 30 years.
Contact us today to take advantage of these home loan benefits.
How The Mortgage Agency Can Help
Our brokers are specialised in acquiring home loans for accountants and other financial professionals. Over the years, we have assisted many to take out the maximum loan amount with a minimal deposit, no LMI and lower interest rates.
We’ll handle all the nitty-gritty on your behalf. We can meet you wherever you’re at, and we’ll take a look at your current financial situation and provide advice on the best strategies to put into place so that you can reach your financial goals.
We’re committed to helping you achieve homeownership and saving you money in the process – whether it’s your first home or investment property. We can also take a look at an existing home loan and help you refinance to achieve a more viable option.