Lenders Mortgage Insurance (LMI) is normally charged when borrowing over 80% of the property value, but select borrowers are eligible for a 90% no LMI home loan.
Who is eligible for 90% no LMI?
- Doctors and select medical professionals including dentists, optometrists, veterinarians, chiropractors or pharmacists (exclusive interest rate discounts are also on offer).
- Other white-collar professionals including accountants, lawyers, geologists and other mining specialists, professional athletes and entertainers. Minimum income benchmarks and other requirements apply.
- Borrowers purchasing a Defence Housing Australia (DHA) property as an investment.
The secret tip to borrowing 100% no LMI
- By asking your parents to act as guarantor on your home loan, you can actually borrow 100% of the property value, plus the purchase costs and avoid mortgage insurance completely.
- With no deposit, you’ll save thousands, and by avoiding LMI, you’ll save thousands more!
Call us on 1300 889 743 or fill in our free assessment form to discover if you qualify for a 90% no LMI home loan, or whether you can borrow more and still avoid this huge mortgage cost.
Is there a borrowing limit with 90% waived LMI home loans?
When borrowing up to 90% of the property value, or at a Loan to Value Ratio (LVR) of the 90%, the maximum loan amount that banks will typically lend is $1 million.
This borrowing cap doesn’t seem logical in a rising property market and, in particular, when you want to buy multiple investment properties simultaneously to fast-track your property portfolio.
There are exceptions to this policy:
- Doctors and select medical professionals are eligible to borrow a maximum loan amount of $4.5 million.
- If you’re in an acceptable professional and a strong financial position, some lenders will allow you to borrow up to $2 million.
What if I don’t qualify for a 90% LMI waiver?
If you’re not an eligible professional, don’t meet minimum income requirements or you’re not buying a DHA property, there are other ways to avoid mortgage insurance:
- Save a little more to qualify for an 85% no LMI home loan.
- You can at least save on the cost of mortgage insurance with these five golden tips to reduce your LMI premium bill.
Why are some lenders willing to waive LMI at 90%?
The reason why LMI is charged when you borrow over 80% is because at this LVR, there is a higher chance of mortgage default.
However, since mortgage insurance was introduced in around 1995, banks and lenders have been able to collect a lot of data and discovered which borrowers are less likely to default and more likely to pay their mortgage repayments on time, every time.
They have also been able to correlate this with who tends to borrow higher loan amounts.
High-income earners with stable incomes tend to be the best customers and, more often than not, it’s doctors and select white-collar professionals that fit these characteristics perfectly.
So why does 90% no LMI apply to DHA properties?
Some lenders waive LMI at 90% LVR because DHA properties tend to hold their value and come with guaranteed rent.
Select lenders see this as a lower risk compared to a standard property.
The reason is that the property would be easier to sell in the event that you default on your mortgage.
Other lenders don’t like DHA real estate at all so applying with the right lender is essential!
Why do guarantor home loans get an LMI waiver?
No LMI guarantor home loans exist purely for the reason that you’re able to reduce your LVR to below 80% of the property value.
In a guarantor loan arrangement, your Mum and Dad are guaranteeing 20-25% of the purchase costs using their property as a security guarantee.
In this way, it negates the need for the bank to charge LMI and you won’t need to provide a deposit.
You can save thousands, move into your home sooner and focus on paying down your home loan to 80% LVR so you can remove your parents as guarantors.
Looking to grow your property investment portfolio?
Buying investment properties requires an effective mortgage strategy, and this is where a lot of inexperience property investors fail.
We’re experts in investment loans, and we understand the needs of high income earners. For example, one of the biggest mistakes we see is borrowers keeping all of their home loans with one lender and quickly exceeding their exposure limit.
This can stop your property investment journey in its tracks!
We have many guides and tools that will help you to avoid the traps of property investing, including:
- What to look for in real estate.
- The pros and cons of rentvesting.
- How to manage cash flow when negative gearing.
- The risks of interest only loans.
Apply for a 90% no LMI home loan
We’ll assess your eligibility and let you know if you qualify for a 90% waived LMI home loan.
Call us on 1300 889 743 or complete our online assessment form to start the process today.