Lenders may waive LMI for highly-qualified professionals, such as doctors, lawyers, accountants and engineers
Check with a lender before applying to see if you qualify for an LMI waiver.
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.
How do LMI waivers for home loans work?
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.
Which professions are eligible for LMI waivers on home loans?
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.
How much can professionals save in waived LMI premiums?
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.
What lenders allow this and how can you get the discount?
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:
Getting a guarantor. Getting a guarantor lets you qualify for a loan with a deposit below 20% and avoid LMI. By using their property as security, the guarantor minimises the risk to the lender.
Borrowing smaller amounts. Borrowing less means your LVR will be smaller, and therefore your LMI bill will be smaller or non-existent.
Save a bigger deposit. This is easier said than done, of course, but here are some deposit saving tips to help.
Borrowing off family. While most lenders require at least 5-10% in genuine savings regarding your deposit, if your family can give you more in the guise of a gift, you might be able to avoid LMI because your deposit is larger.
Apply for the First Home Loan Deposit Scheme. If you're eligible, the First Home Loan Deposit Scheme lets you buy a home with a 5% deposit and avoid LMI thanks to government support.
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Richard Whitten is a money editor at Finder, and has been covering home loans, property and personal finance for 6+ years. He has written for Yahoo Finance, Money Magazine and Homely; and has appeared on various radio shows nationwide. He holds a Certificate IV in mortgage broking and finance (RG 206), a Tier 1 Generic Knowledge certification and a Tier 2 General Advice Deposit Products (RG 146) certification. See full bio
Richard's expertise
Richard has written 530 Finder guides across topics including:
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