No Lenders Mortgage Insurance (LMI)
In some cases accountants may qualify for waived LMI with their home loan. This could save you around $24,000 for a 90% loan on a $1,000,000 property!
The main qualifying criteria are:
- Borrow up to 90% of the property value.
- Purchases and refinances are both eligible.
- No minimum income required with one of our lenders. Otherwise, you must be earning a minimum of $120,000 – $150,000 per annum*
- Maximum loan amount against any one security is $2.7 million (i.e. the property value must not exceed $3 million). Typically, this is limited to $ 2 million per security.
- Higher exposure limit when purchasing multiple investment properties.
- You must be an accountant, finance manager, auditor or actuary.
- Evidence of your degree or industry membership (e.g. CPA Australia) may be required.
- You must meet all standard lending criteria.
*This includes your taxable income and rental income. It doesn’t include your spouse’s income.
To find out more please call us on 1300 889 743 or fill in our free assessment form.
Special interest rate discounts
Some accountants don’t qualify for a waived LMI premium or don’t need it as they are borrowing less than 80% of the property value.
In this case we can offer special negotiated interest rate discounts on your home loan. The discount will depend on:
- Your total loan size.
- The percentage of the property value that you are borrowing.
- Your industry membership and degree.
These professional discounts are all considered on a case by case basis. Please call us on 1300 889 743 or fill in our free assessment form for more information.
Minimum income requirement to avoid LMI
You must be earning a minimum of $120,000 in WA, SA, NT and TAS and a minimum of $150,000 in NSW, ACT, VIC and QLD to be eligible for waived LMI.
This can include your rental income but cannot include the income of your spouse unless they are also an eligible accounting professional.
If you don’t meet this income requirement, then your total income (including you, your spouse and any rental income) must be at least $150,000 or more. This classes you as a high income earner.
What this means is, if an accountant earns $100,000 and their non-accountant partner earns $50,000, the couple can still get waived LMI.
No minimum income required
The minimum income requirement for waived LMI home loans for accountants meant a significant number of qualified accountants didn’t qualify for the LMI waiver as they earned below this threshold.
In good news for CA, CPA, CFA and FIAA members, one of our major lenders no longer has a minimum income requirement.
Accounting professionals who previously didn’t qualify for the LMI waiver may now do.
Moreover, the max loan size against a single security is $2.7 million; ergo, the max property value you can purchase or refinance is $ 3million.
As a point of note, qualified professionals need to hold at least a 50% interest in the property.
For example, if there are two borrowers, where one is an actuary, and the other is a social worker, then the actuary must have at least a 50% ownership interest in the loan property.
Why is waived LMI such a great deal?
If you are buying a home or investment property and you don’t have a 20% deposit then you’ll pay a once off fee known as Lenders Mortgage Insurance. This can cost tens of thousands of dollars depending on the size of your loan.
Some banks offer no LMI loans for accountants to try to attract high quality customers like you.
Many accountants use this to rapidly grow a portfolio of investment properties.
You can buy multiple properties with smaller deposits and build a large portfolio for your retirement.
What are the qualifying criteria?
Typically, there are three main qualifying criteria:
You must meet all three criteria for the LMI waiver.
Eligible occupations for the LMI waiver
To be eligible, you should be currently working as one of the following:
- Chief Financial Officer
- Finance Director
- Finance Manager
- Financial Controller
Minor variations to this list are acceptable as job titles do not always match the occupations listed above.
For example, an applicant with a job title ‘Tax Accountant’ or ‘Internal Auditor’ can be accepted.
Which industry memberships are recognised?
To be eligible for a no LMI loan you must be a CA, CPA, CFA or FIAA and registered with:
- Chartered Accountants Australian and New Zealand (CAANZ) – including Global Accounting Alliance
- Certified Public Accountants Australia (CPA) – – including recognised partnering professional bodies
- Chartered Financial Analyst Institute Australia (CFA)
- Fellowship of the Institute of Actuaries of Australia (FIAA)
- Institute of Public Accountants (IPA)
- Other industry bodies are considered on a case by case basis.
What’s an acceptable form of evidence of membership?
An acceptable form of evidence can be any one of the following:
- Receipt for payment of annual membership
- Current valid membership card
- Written confirmation from the listed association
- Practising Certificate
An invoice and proof of payment from the relevant governing body, or internet print out confirming current membership, or
current year’s certificate confirming current membership are also accepted.
Is an overseas qualification acceptable to lenders?
An accountant with an Australian equivalent overseas qualification is usually accepted after a review. However, they are considered on a case by case basis.
Partners in an accounting firm
Because there are several partners in a firm (often 5 – 20) it is quite different to a company that is owned and managed by one person.
Standard bank policy requires that you provide the financial statements and tax returns for any business which you have a shareholding in that generates more than 25% of your income. This includes income via a salary, directors fees or dividends.
If you are applying for a commercial loan in the name of the business, then the banks will need to assess the financial situation of the entire business. However, for a home loan it shouldn’t be necessary for the bank to review your entire company.
As a partner in an accounting firm we can get this requirement waived.
Please call us on 1300 889 743 or enquire online and one of our specialist mortgage brokers will contact you to discuss your situation.
How do I prove my income as a partner?
Typically, banks and other lenders will want to see your personal tax returns and notices of assessment for the last two years. If your salary is sufficient to service your debt then we can accept your two most recent payslips on their own.
However, those who are partners in selected larger accounting firms may be able to provide proof of their income via a letter or email from the firm’s Administration Manager (or equivalent) when applying for a residential home loan.
The letter will be used for income verification purposes instead of standard self-employed income documentation such as tax returns.
Which firms qualify for reduced income verification?
If you are a partner in one of the following firms and borrowing less than 80% of the property value then you may be eligible to provide an employment letter as proof of your income:
- Ernst & Young
- Minter Ellison
- Allens Arthur Robinson
- Henry Davis York
- Corrs Chambers Westgarth
- Mallesons Stephen Jacques
- Clayton Utz
- McGrath Nicol
- Grant Thornton
To find out what kind of income verification you will need, speak to one of our brokers on 1300 889 743 or enquire online.
Why do banks struggle with partnerships?
A partnership is a relationship not a separate legal entity.
It includes two or more people (rarely more than 20) going into business together to make a profit.
Partners share all the business assets and liabilities so it is vital that each partner knows their rights, responsibilities and obligations.
Banks often struggle with financing a partnership because of the unique legal structure of the entity. While banks can handle a sole trader, company, trust or Australian Securities Exchange listed company, their systems and processes are not set up with partnerships in mind.
Apply for a home loan
Did you know that we have special packages for high net worth professionals and can negotiate special discounts on your behalf?
Are you a partner in an accounting firm looking at purchasing a residential property?
Speak to a mortgage specialist on 1300 889 743 or enquire online to find out if you are eligible.