This product is not yet available in Australia!
In the United States, borrowers are able to pay Lenders Mortgage Insurance (LMI) (known as Private Mortgage Insurance or PMI in the US) monthly rather than paying an upfront premium or adding the cost of LMI on top of your home loan.
You not only avoid paying a large upfront cost but it also means you don’t need as large of a deposit to qualify for a home loan.
Is it available in Australia?
Paying a monthly LMI premium is only available in the US and it’s not clear as to whether this will be available in Australia any time soon.
However, there are ways to save on mortgage insurance or get waived LMI in Australia, right now.
How can I save money on LMI in Australia?
- Doctors, other medicos, and select professionals can qualify for a no LMI home loan, saving them literally thousands of dollars.
- You can capitalise the cost of LMI, interest-free, on top of your home loan so you don’t have to pay this cost upfront and simply pay off the premium with your regular home loan repayments.
- Shop around for cheaper LMI using our calculator because each LMI provider charges a different premium rate.
Call us on 1300 889 743 or complete our online enquiry form to find out how much we can save you on LMI.
What are the benefits of paying LMI monthly?
There are benefits to paying LMI monthly as opposed to the lump sum payment that Australian lenders require us to pay, including:
- There’s no upfront cost.
- It gives you an incentive to pay the loan down quickly.
- You need a much lower deposit.
- Suits high income earners.
Example of LMI capitalisation
If you’re applying for a $450,000 home loan for a property worth $500,000 then you would have to pay a once-off LMI premium of around $9,950.
Instead, you can add it to your home loan amount so the loan amount become $459,950.
That means, in effect, you are paying it in monthly installments.
Keep in mind that not all lenders allow you to add the cost of mortgage insurance on top of your mortgage.
Can I avoid paying Lenders Mortgage Insurance altogether?
Select professionals can get their mortgage insurance waived completely.
Banks have specific criteria regarding your profession and income before offering waived LMI.
No LMI when borrowing up to 90% of the property value is typically only available to:
- Mining specialists, must either be a mine surveyor, quantity surveyor or geologist/geophysicist.
- Professional athletes, and
- Entertainment professionals.
Please fill in our online enquiry form or call us on 1300 889 743 to discover whether you qualify for a 90% no LMI home loan.
What if I’m not an eligible professional?
A couple of our lenders offer 85% waived LMI even if you’re not one of the above professionals.
You may evenqualify for a mortgage insurance discount depending on your loan amount, loan to value ratio (LVR) and your level of income.
If you meet the following criteria, you’re generally considered a low risk borrower:
- Loan amount: Generally speaking, loan amount above $1 million tend to attract more LMI.
- Genuine savings discounts: Having at 5% of the purchase price in genuine savings allows you to get standard LMI rates which are cheaper than a no genuine savings LMI premium.
- Lower your LVR: Keep your Loan to Value Ratio (LVR) to around 80% of the property value or lower and you can avoid LMI altogether.
- Use a guarantor: With a a guarantor, you can borrow up to 105% of the purchase price and pay no LMI, which amounts to 100% of the property value plus the costs of completing the purchase.
Please call us on 1300 889 743 or fill in our free assessment form to discover which strategy is right for you to avoid mortgage insurance.
Can you cancel LMI?
If you owe less than 80% of the property value on your mortgage, you can cancel the LMI premium by having your property revalued.
To find out how much you could save on LMI, talk to one of our specialist mortgage brokers by calling us on 1300 889 743 or by completing our enquiry form.