How can I avoid Lenders Mortgage Insurance?

Any general questions you might have in regards to loans and finance.
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Otto Dargan
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Re: How can I avoid Lenders Mortgage Insurance?

Post by Otto Dargan »

Hi Corazon,

Yes, you have heard it right. :(

It is known as Lenders Mortgage Insurance (LMI) and is a one-off insurance payment which protects the lender if you default on your home loan. Most lenders charge you LMI when the Loan to Value Ratio (LVR) is 80% or more. However, some lenders allow you waived LMI loans when borrowing up to 85% of the value of the property.
Since you are planning on borrowing 85% LVR, it may be possible for you to have your LMI waived. For this, however, you would need to meet the following criteria:
  • Perfect credit history: You should be paying all your bills such as rent, credit cards, personal loans and other debts on time every time for the last six months.
  • Stable employment: In most cases, lenders require you to have been in your current job for six months or more.
  • A good income source: Lenders want you to have a job with good pay so that they can be sure about your ability to repay any loan over 80% of the property value.
  • Strong asset position: Lenders want to see that you have a good asset position relative to your age and income.
Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: How can I avoid Lenders Mortgage Insurance?

Post by Otto Dargan »

Hi Corazon,

Lenders may waive the LMI up to 90% if the applicant is from a certain profession as they see some professionals as low risk borrowers.

Each professional can have a different set of criteria that they need to meet to have their LMI waived. For doctors, LMI may be waived on LVR up to 90% and on a loan amount up to $4.5 million. Similarly, an accountant, engineer or a lawyer, may have their LMI waived on LVR up to 90% and on maximum loan amount of $2.0 million.

If you want to avoid it altogether, you may opt for guarantor home loans. This type of loan allows a borrower to borrow more than the value of a property to cover expenses, stamp duty and, even in some cases, costs for renovations.

If you would like to know more about these then you can check out our website. We can also be reached on 1300 889 743 or you can fill in our free assessment form to see if you qualify for a loan or not.
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

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