If you’re a doctor or other highly paid medical professional, you could get a lower rate home loan and avoid paying LMI premiums, saving you tens of thousands of dollars when buying a home.
Doctors are highly trained, very employable and generally well paid. As a result, lenders view doctors and medical professionals as lower-risk borrowers.
Lenders may offer extra benefits like a discount or full waiver on lenders mortgage insurance (LMI), lower rates or waived fees.
A good mortgage broker can help doctors find lenders with more flexible lending policies.
Normally, when a borrower approaches a lender with a deposit of less than 20%, the lender charges an LMI premium. LMI protects the lender if you can't repay the loan at any point, but the lender requires you to pay the premium.
But if you're a doctor, your lender may waive this cost. Medical professionals are highly paid and have secure work, so in the lender's eyes, the risk that you will default on your repayments is lower. This means doctors can get low deposit home loans cheaper than other borrowers.
Avoiding LMI could save you thousands, or even tens of thousands in premiums (we've crunched the numbers below). LMI is generally paid upfront as a lump sum, so it's a huge amount to save on top of your deposit and stamp duty.
How much could a doctor save on LMI premiums?
The amount of LMI you could save with one of these loans can differ depending on whether or not you're a first home buyer, where you're buying and more. Here are some indicative figures using Finder's LMI premium calculator.
All the results below are estimates for a first home buyer with a 30-year loan.
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
In these example scenarios, a doctor can save tens of thousands in LMI premiums, while still getting access to the loan they need.
Expert insight
"Most major banks and lenders in Australia waive LMI for eligible medical professionals. This fall under the lenders' Medico Policy. Doctors can often borrow up to 90–95% (depending on the lender) LVR with no LMI. Each lender has its own approved occupation list. Speak to a broker that can help to see if you qualify for the LMI Waiver."
Lenders offer discounted rates for all sorts of reasons. Sometimes they advertise these rates for all borrowers. Often they don't. You probably won't find "discounted rates for doctors" listed on any lender's website.
But it's worth asking about any discounts when you apply. You may be able to negotiate a lower rate quite easily as a doctor.
And discounted rates can save you a lot of money. Let's say you wanted to borrow $600,000 over 30 years, and your lender's rate is 6.50%. But you negotiate a 0.10% rate discount.
Monthly repayments at 6.50% = $3,793
Monthly repayments at 6.40% = $3,754
That's a small difference of $39 a month. But that's $468 in a year. And your home loan could be with you for decades, so any discount on your rate will save you thousands over the longer term.
Fee waivers
Lenders may also waive loan fees for doctors. This could include the application fee or ongoing service fees. The exact amount you could save varies by lender and your best bet is to ask up-front, as a fee waiver could save you a few hundred dollars, or more.
Example: Dr Ash's home loan
Dr Ash is a surgeon who earns $350,000 per year. He’d like to buy himself an inner-city apartment priced at $1 million, but he’s only got $100,000 saved for a deposit, which is 10%. When he approaches his bank for a loan, he’s dismayed to discover that it requires him to fork out over $22,000 for lenders mortgage insurance before they will approve him for a loan.
Looking elsewhere, he discovers a lender that offers home loans for doctors. This lender is happy to waive his lenders mortgage insurance payment even though he needs to borrow 90% LVR, plus they also offer a lower interest rate than his bank. As a result, Dr Ash is set to save approximately $20,000 in LMI costs. * This is a fictional, but realistic, example.
How do I access these home loan discounts as a doctor?
If you don't ask you don't get, and many lenders aren't public with their lending and eligibility criteria. So you'll need to be proactive – here's what we suggest you do:
Before you apply for a home loan, check with the lender if they have a policy for medical professionals. Ask them if they offer rate discounts or LMI waivers for doctors with low deposits.
If you're unable to find a lender that can help, consider talking to a mortgage broker. These professionals have a good sense of which lenders offer the best benefits to doctors.
Which medical professionals can qualify for these benefits?
Everything we've covered on this page ultimately depends on the specific lender you choose. But as a general rule, lenders may offer discounts and LMI waivers to doctors and other highly qualified medical professionals. This includes specialists, surgeons, dentists and anaesthesiologists.
You may be able to qualify for these benefits as an intern or resident, but generally, lenders won't consider nurses or medical researchers.
Frequently asked questions about home loans for doctors
These types of loans can be used to buy your first home or your next home, to switch from your current mortgage to a better one, to purchase an investment property or to build a new home. However, while they're set up in much the same way as regular loans, if you're a highly-paid professional you can get a home loan with a range of attractive benefits and features to reflect the fact that you're considered a low-risk borrower.
Medical practitioners and doctors who are eligible for home loans can often get an interest rate discount, which increase the amount they're eligible to borrow. The exact amount you can borrow depends on your income, but you may be able to borrow up to 95% of the property's value.
The amount of LMI you could save with one of these loans can differ depending on whether or not you're a first home buyer, where you're buying and more. Here are some indicative figures using Genworth's LMI Premium Estimator for a first home buyer with a 30 year loan.
Auswide
Bank of Melbourne
St.George
Westpac
Sources
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Richard Whitten is Finder’s Senior Money Editor, with over eight years of experience in home loans, property, credit cards and personal finance. His insights appear in top media outlets like Yahoo Finance, Money Magazine, and the Herald Sun, and he frequently offers expert commentary on television and radio, helping Australians navigate mortgages and property ownership. Richard started his career in education and textbook publishing in South Korea. He holds multiple industry certifications, including a Certificate IV in Mortgage Broking (RG 206) and Tier 1 and Tier 2 certifications (RG 146), as well as a Bachelor of Education from the University of Sydney and a Graduate Certificate in Communications from Deakin University.
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Sarah is the author of How to Raise Rich Kids. With over 20 years of experience in property, finance and investment journalism, she is a trusted expert whose insights regularly appear across television, radio and print media, including Sunrise, Channel 7 News, Bloomberg and Yahoo! Finance. She has previously served as managing editor for Your Investment Property and Australian Broker. Her expert advice has been shared in the media over 4,000 times. Sarah holds a Bachelor’s degree in Communications and a Tier 1 Generic Knowledge certification, which complies with ASIC standards.
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