LMI Discounts And No LMI
Few people realise that different lenders have different lenders mortgage insurance (LMI) premiums. What most people also don’t know, is that savings are often far more significant than any difference in interest rate.
Have you ever seen an ad on TV claiming that a lender has the cheapest LMI premiums available? No? This is because lenders don’t advertise their premium rates!
Although it’s increasingly rare, it may be possible to get the lender to waive your LMI completely or to charge a negligible amount. To do this though, most lenders require that you meet the following criteria:
- Maximum loan size of $4.5 million.
- Maximum loan of 90% of the property value (borrowing more is sometimes possible).
- You must be a member of an appropriate industry organisation (e.g. AMA).
- You must be on the preferred medical professionals list, a dentist, optometrist, veterinarian, chiropracter or a pharmacist.
- Call us on 1300 889 743 or complete our free assessment form to find out more.
Accountants, lawyers, mining engineers, pro athletes and entertainment professionals
- Maximum loan size of $2.0 million.
- Maximum loan of 90% of the property value.
- You must be a member of an industry organisation (contact us for the list).
- Accountanting professionals must either be an accountant, chief financial officer (CFO), finance manager, auditor or actuary.
- Legal professionals must either be a lawyer, barrister, judge or solicitor.
- Mining, energy and resources professionals must either be a surveyor, mine surveyor, quantity surveyor or a geoligist/geophysicist.
- Different professional athletes will be considered under the condition that they have an accredited manager, agent or account
- Entertainment professionals must work in either the television, film, theatre, music or fashion industries. Please speak to us to find out if you’re eligible.
- You must have an income of over $150,000 per annum or will soon be on a similar income. Rental income can be considered.
- Call us on 1300 889 743 or fill in our free assessment form to find out the full criteria.
- Your loan is no more than 85% of the property value (85% LVR).
- You have a perfect credit history.
- You’re buying a property (refinances to purchase a property may be accepted).
- Max $1,000,000 loan size.
- Max $1,500,000 in total loans with no LMI.
- Major metro areas only.
- If the security property is in Sydney the combined income of all borrowers must be over $180,000 (excluding rent income).
- Call us on 1300 889 743 or complete our free assessment form to find out the full criteria.
Are there first home buyer LMI discounts?
Select mortgage insurance companies have a 15% discount on their LMI premium for first home buyers.
This is only available through the lenders that deal with these specific LMI providers and have negotiated this discount on behalf of their customers.
In most cases, your home loan must be for less than $600,000 and your deposit must not be from a borrowed source.
First home buyer rate discounts
Why do banks only accept certain professional?
There a few banks that have a list of accepted professionals that they will consider for waived LMI, higher loan limits and significantly reduce interest rates.
Why do they do this?
The reason is that they want their business!
Banks have found that select professionals in the medical, accounting, legal, engineering, sporting and entertainment industries:
- Rarely default on their mortgage.
- Make their repayments on time.
- Borrow at higher loan amounts than other customers.
Although they don’t necessarily become repeat customers, they’re highly influential and are connected to other high net worth individuals in the same industry.
Banks want to capture these borrowers because they present the lowest risk for the highest pay off.
Remember these basic tips to reduce your LMI premium
The first step in getting a low premium is to understand how the LMI premium is calculated and then determine if there’s anything you can do to qualify for a cheaper premium. The factors you should consider include:
The loan amount
The larger your loan, the higher the percentage of the loan amount the mortgage insurer will charge you.
Loans less than $300,000 have very cheap LMI, loans between $300,000 and $500,000 have moderate LMI, and loans greater than $500,000 have very expensive LMI. If you’re borrowing $300,001, you could reduce your mortgage by just $1 and immediately save as much as $800!
The LVR of your loan is the percentage of the property value that you’re borrowing. If you’re borrowing $900,000 secured on a $1,000,000 property then you’re borrowing 90% which means your LVR is 90%. The higher your LVR, the higher will be your LMI premium.
There’s a significant increase in the premium when you borrow just $1 over 90% or over 95%. If you’re close to these thresholds then reduce your loan amount to 90% or 95% and you can easily save a thousand dollars or more.
The lender / mortgage insurer
Different lenders and insurers have different LMI premiums. This is because they see the risk of different loan types, loan amounts and types of borrowers in different ways, and price their premiums accordingly.
To find the cheapest LMI providers please complete our free assessment form or call us on 1300 889 743 to talk to one of our specialist mortgage brokers.
What are genuine savings discounts?
Each mortgage insurer has several LMI products which are used for different borrower and mortgage types. Their Standard LMI product is usually for people who can demonstrate that they have a saved deposit.
In many cases, they may also have a no genuine savings product (such as Genworth Financial’s “Homebuyer Plus” product).
How does the source of your deposit change your LMI premium?
- 5% genuine savings allows you to get standard LMI rates.
- No genuine savings may mean you need to pay a higher LMI rate.
- No genuine savings and a borrowed deposit (e.g. personal loan, loan from parents) may mean your premium is even higher than a no genuine savings premium.
This varies between lenders with some having one set of premiums for all borrowers and others loading the premium depending on various factors. Our mortgage brokers will compare premiums from several lenders to ensure you get the lowest possible premium.
Choose the cheapest provider
The best way for most people to get the lowest possible LMI premium is to apply with a lender that uses a discounted LMI provider. Lenders don’t publish their LMI rates to the general public and do not disclose which LMI company insures their loans.
Please fill in our free assessment form or contact us on 1300 889 743 and one of our mortgage brokers can help you find the lowest premium.
Apply for a Guarantor loan
If you have a guarantor for your loan that’s providing their house as additional security for the bank then you won’t need to pay any LMI even if you’re borrowing 100% of the property value.
The reason is that when the guarantor’s property is taken into account, you’ll be borrowing less than 80% of the total value of both properties, so the lender will be happy to approve your mortgage without LMI.
Why have engineer discounts returned?
Up until September 2016, all lenders had pulled out of offering LMI waivers at 90% LVR for mining engineers.
The reason was due to the downturn in the mining, energy and resources sector.
Banks felt there was a high risk in offering mortgage discounts because of fluctuating job opportunities where mining companies were here one day and gone the next.
The chance of stable employment was seriously under threat.
However, a couple of lenders are now offering these amazing deals again because they have confidence in the upswing the industry.
You can view current discounts on our Engineer, Surveyor, Mine Surveyor, Quantity Surveyor, Geologist or Geophysicist page.
Apply for a home loan
Our mortgage brokers know which lenders mortgage insurers are the cheapest. Some lenders offer specials in an attempt to gain additional market share, and in many cases, these LMI specials are not advertised to the public.
Please complete our free assessment form or call us on 1300 889 743 to discuss your situation with one of our specialist mortgage brokers.