Can I avoid paying LMI on my home loan?

Any general questions you might have in regards to loans and finance.
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afish
Posts: 63
Joined: Mon Jun 15, 2009 4:46 pm

Can I avoid paying LMI on my home loan?

Post by afish »

Hello brokers, I am thinking about buying a house in a few months and I need to borrow money from the bank. I was told by a couple of my friends that banks charge high LMI fees on home loans. Is there any way at all to avoid paying this fee on my home loan?

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Otto Dargan
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Re: Can I avoid paying LMI on my home loan?

Post by Otto Dargan »

Hi and welcome to the forums afish,

You are usually required to pay LMI on your home loan if you borrow more than 80% of the property price. Some lenders may even waive LMI on loans up to 85% however you would need to meet the following criteria in order to qualify:
  • Have a clear credit history by paying all your bills such as rent, credit cards, personal loans and other debts on time every time for the last six months.
  • Be in your current job for six months or more.
  • Have a good income source so that you easily repay any loan over 80% of the property value.
  • Have a good asset position relative to your age and income.
  • Have at least 5% of the purchase price saved up as genuine savings.
If you are a professional then you may be able to have your LMI waived on loans over 85%.

Cheers,
Otto
Otto Dargan
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P | 1300 889 743
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afish
Posts: 63
Joined: Mon Jun 15, 2009 4:46 pm

Re: Can I avoid paying LMI on my home loan?

Post by afish »

Well, I am an accountant. Do you think I would qualify for a waived LMI over 85%?

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Otto Dargan
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Re: Can I avoid paying LMI on my home loan?

Post by Otto Dargan »

Hi afish,

You may qualify for a loan discount since lenders see accountants as low risk borrowers with long term career prospect and a high income earning capacity. Therefore, you may entitled to a waived LMI or a reduced interest rate.

The interest rate discount will depend on the total size of your loan, the percentage of the property value that you are borrowing and your industry membership and degree.

As for the waived LMI, you would need to meet the following criteria in order to qualify:
  • Not borrowing more than 90% of the property value.
  • Borrowing to either purchase a new property or refinance an existing one.
  • Must be an accountant, finance manager, auditor or actuary.
  • Income must be over $150,000 however some exceptions are available.
  • Must provide evidence of your degree or industry membership.
  • Must meet all standard lending criteria.
You may also be able to buy multiple investment properties without paying LMI.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

afish
Posts: 63
Joined: Mon Jun 15, 2009 4:46 pm

Re: Can I avoid paying LMI on my home loan?

Post by afish »

Wow I didn’t know accountant could also be considered for a loan discount. Thanks for letting me know about this. Will give you guys a ring in a couple of days to see how much discount I may be able to get on my loan. See ya!

moodyjack
Posts: 47
Joined: Wed Jun 17, 2009 4:36 pm

Re: Can I avoid paying LMI on my home loan?

Post by moodyjack »

Hey, I am also planning to buy a house worth $510,000 and I need to borrow more than 85% of the property value. Is there a way to get a discount on the LMI fee? Do banks offer such discounts to normal borrowers like me??

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Otto Dargan
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Re: Can I avoid paying LMI on my home loan?

Post by Otto Dargan »

Hi moodyjack,

Yes, lenders may offer a reduced or discounted LMI on loans up to 95% of the property value if you meet the following criteria:
  • You should be buying a property (refinances not included).
  • You should saved up at least 5% in genuine savings.
  • One borrower should be in their current job for at least two years and the other borrower for at least six months.
  • You should have a perfect credit history.
  • You should not be borrowing more than $800,000.
  • The property that you are buying should be in a capital city or major regional centre.
Some mortgage insurance companies may even provide a 15% discount on LMI premium for first home buyers. This is available only through the lenders that deal with these specific LMI providers who have negotiated this discount on behalf of their customers. To qualify for this discount, your home loan must be for less than $600,000 and your deposit must not come from a borrowed source.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

moodyjack
Posts: 47
Joined: Wed Jun 17, 2009 4:36 pm

Re: Can I avoid paying LMI on my home loan?

Post by moodyjack »

Oh fantastic. I will call you guys as soon as possible so that this discount can be arranged on my home loan. Speak to you soon. :)

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