If you have very specialised qualifications in a high-demand field, plus a relatively high income, lenders view you as a low-risk applicant. This can mean better lending terms, even if you don't have a standard 20% deposit.
That can save you thousands in LMI costs and help you enter the market faster.
Let's use a simple example to explain how this works. Say you decide to buy a home. You're a lawyer with a high income and you're now a partner at your firm. But you've not been earning a 6-figure income for long, having previously worked in non-profit law.
You have saved up to $100,000, which is a 10% deposit on the $1 million home you're looking to buy.
Your lender approves the loan but charges you over $20,000 in LMI premiums as a low-deposit borrower. You point out that you're a lawyer with a very high income, but the lender won't budge.
Then you approach another lender and mention your profession. The new lender says they'll happily waive LMI based on your profession and income. And just like that, you've saved yourself more than $20,000.
That makes the sting of your HECS debt feel a little better.
The following professions are generally eligible for an LMI waiver:
To be eligible, you generally need to be earning above a minimum salary threshold. For many lenders that is at least $90,000 a year but it can go up to $150,000 depending on your profession. You also need to be a member of your industry's peak body or authority, such as the Australian Medical Association.
The following table shows an estimation of the hefty LMI costs associated with obtaining a home loan. Avoiding these costs can save you thousands of dollars on your home loan.
All the results below are estimates for a 30-year loan term.
| Deposit size | Property value | LMI premium |
|---|---|---|
| $25,000 | $500,000 | $15,888 |
| $50,000 | $500,000 | $8,428 |
| $37,500 | $750,000 | $32,867 |
| $75,000 | $750,000 | $15,977 |
| $50,000 | $1,000,000 | $43,728 |
| $100,000 | $1,000,000 | $22,644 |
The above figures are estimates only, taken from Finder's LMI premium estimate calculator.
A number of lenders offer these loans, including Auswide, Bank of Melbourne, St.George and Westpac.
However, many lenders will not offer these discounts up front. In fact, it may be harder for you to obtain this special discount by asking for it directly. It may be best to go through a mortgage broker – they know a few more ways to speed things up so you can take advantage of this special discount faster and with less hassle.
But what about those of us who aren’t doctors, lawyers or engineers earning between $90,000 and $150,000 a year? There are other ways to avoid LMI.
No matter what your occupation is, you can still save on your home loan and LMI by doing the following:
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