How can I pay no LMI on my home loan?

One of the most straightforward ways to get LMI waived is to apply for a low deposit home loan. These loans are designed for borrowers who have a deposit of less than 20% but want to avoid paying LMI. They work by allowing borrowers to use other forms of security or guarantors to make up the difference in the deposit. These options include government schemes that enable no LMI for first home buyers and also family guarantees.

For example, some lenders may allow borrowers to use a family member's property as security for the loan or have a family member act as a guarantor. This can be a good option for first or second time buyers who may not have a large deposit saved up but have a family member who is willing and able to help.

LMI waiver for professionals

Another option for professionals is to use their profession to negotiate with lenders. Some lenders offer special discounts or waivers on LMI for certain professions, such as doctors, nurses, lawyers, accountants and professional athletes. Borrowers who work in Australia and meet the qualification and income criteria have the opportunity to borrow up to 90% of the property purchase price with waived LMI essentially providing the borrower with a no LMI home loan.

What professions are eligible for LMI waivers?

Professionals in certain fields, such as medicine, law, engineering, and accounting, may be eligible for LMI waivers if they meet certain criteria. Professionals include;

• LMI waiver for health professionals including doctors, dentists, physiotherapists, chiropractors, pharmacists and veterinary practitioners

• LMI waiver for accountants

• LMI waiver for nurses and midwives

• LMI waiver for lawyers, solicitors and barristers

• LMI waiver for professional athletes

Certain lenders provide this option because these professions are generally considered to be low-risk borrowers due to their higher income and job stability. By negotiating with lenders, professionals may be able to secure a lower interest rate or have LMI waived altogether.

You will need to provide evidence of your income, such as payslips or tax returns, qualifications, to demonstrate that you meet the income and eligibility requirements for an LMI waiver.

Consider using a guarantor

Buying a property in Australia can be a challenging process, particularly for first-time homebuyers who may not have the financial resources required to secure a mortgage. One potential solution is to enlist the help of a guarantor, who can offer their financial backing to help you secure a loan with favourable terms.

A guarantor is typically an immediate family member who has an existing property with little or no mortgage owing on it, and can use that property as collateral to cover the deposit you don’t have.

One of the primary benefits of having a guarantor is that it can help you avoid paying Lender's Mortgage Insurance (LMI). With a guarantor, however, you may be able to secure a loan without having to pay LMI. This is because the lender may view the guarantor's backing as a way to mitigate the risk of lending to someone with a smaller deposit.

It's important to note, however, that being a guarantor is a significant financial commitment, and it's not a decision that should be taken lightly. If you are considering asking someone to be your guarantor, it's essential to have an open and honest conversation about the risks involved and to make sure that both parties fully understand the terms of the loan agreement. The team at Mint Equity can discuss the guarantor arrangement with both the borrower and guarantor so all parties understand the structure and the strategy to release the guarantor as soon as possible.

First Home Buyer LMI Waiver and government grants

Finally, it is worth looking into any government grants or first home buyer schemes that may be available to help you get into the property market. For example, the First Home Loan Deposit Scheme (FHLDS) provides a guarantee to eligible first home buyers with a deposit of between 5% and 20%, which results in a first home buyer no LMI loan as the government covers the cost of the LMI premium.

Similarly, the First Home Owner Grant (New Home) grant provides eligible owner-occupiers with a grant of $10,000 to help purchase a new home that no-one has lived in before. While these grants may not directly waive LMI, they can help you save money on the overall cost of buying a home.

Save a larger deposit

Of course, the most straightforward way to pay no LMI is to save a larger deposit. If you can save up 20% or more of the purchase price of your home, you will not need to pay LMI at all.

While this may take longer, it can be a good option for home buyers who want to save money in the long run and have more equity in their home from the outset.

Generally speaking, when purchasing an investment property the borrowing costs of the home loan are tax deductible, so whilst you may need to pay LMI to secure your investment property, your accountant will be able to advise if this cost is tax deductible.