We believe that everyone can invest in property but navigating lending climates can be challenging at times. A topic that often arises is that of ‘Lenders Mortgage Insurance’ (LMI)’. What is it? What does it mean for me? and is it worth it?
What is Lenders Mortgage Insurance (LMI)
LMI is a one-off fee that the lender charges you, the buyer, so they can take out insurance to protect themselves against the losses they may incur if you don’t repay the loan and they sell the property for less than the outstanding amount. It is dependent on your loan-to-value ratio (LVR) and therefore the size of your deposit.
Paying LMI does typically mean that you require less deposit to purchase a property. For example, a LVR of 90 will trigger LMI but then you only need a 10 deposit.
If you can avoid LMI by having a deposit of more than 20 that’s great, but LMI has helped many first home buyers or investors, just like myself, step foot onto the property ladder. The growth in value of my property has by far, outweighed the cost of LMI or waiting and not investing at all.
Of course, like anything to do with lending, you are best to seek the advice of your friendly mortgage broker to outline the costs, requirements, risks and benefits. If you are unsure and need assistance in finding a broker, please send us an email and we will find someone experienced to help you.
Did you know some professionals are eligible for LMI Waivers?
Several lenders offer LMI waivers of up to 90 LVR for medical and professional services, and some even extending to other professionals such as nurses, midwives, police and emergency services.
Jeremy Zabat and Simon Johnson from Link Finance Group have kindly shared a list of current Medical Practitioners eligible for LMI Waivers: (subject to AHPRA search & lender acceptance)
- Medical Practitioners
- Dental Practitioners
- Optometrists
- Veterinary Practitioners
- Pharmacists Eligible Specialists;
- Anaesthetist
- Dermatologist
- GP
- Paediatrician
- Obstetrician
- Gynaecologist
- Physician
- Ophthalmologist
- Pathologist
- Psychiatrist
- Radiation oncology
- Radiologist
- Surgeon
Newly added below:
- Audiologist
- Occupational therapist
- Osteopath
- Podiatrist
- Psychologist
- Radiographer
- Sonographer
- Speech Pathologist
Partners of the following professional services firms:
- Allens,
- Ashurst,
- Clayton Utz,
- Corrs Chambers Westgarth,
- Deloitte,
- Herbert Smith Freehills,
- HWL Ebsworth,
- King & Wood Mallesons,
- KPMG,
- Maddocks,
- Minter Ellison,
- Norton Rose Fulbright,
- PwC
Whether or not you are eligible for a LMI waiver, have a chat with your mortgage broker about your lending options because whilst it may be an upfront cost now, property investing is long term and time in the market is valuable.
If you’d like to talk more about how to get started with investing, please click on the ‘Start Here’ button above or get in touch via the contact us page.
Happy 2023!
Important: the above is for information purposes only and should not be relied upon as financial product advice. Please seek the advice from your mortgage broker for more information on LMI and waiver requirements. The list of professions above are current as of 20.1.2023 but are dependent on lender and applicant and are subject to change without notice.
DISCLAIMER: This document is for information purposes only and should not be relied upon as financial product advice. Each recipient of this document should carry out and should rely upon its own independent review, investigation and analysis of any proposed investment. This document has been prepared without taking into account the particular legal requirements, investment objectives, complete financial situation or needs of any person or entity. We recommend that before making an investment decision each prospective investor should consult independent and professional advisers and should consider whether an investment contemplated in this document is appropriate for them in light of their particular legal requirements, investment objectives, financial circumstances and needs. We shall not be under any liability for loss or damage of any kind whatsoever arising as a result of any opinion, advice, recommendation, representation or information expressly or impliedly contained in this document notwithstanding any negligence, default, or lack of care by it or that such loss or damage was foreseeable. Further, while all attempts have been made to verify the information provided in this document, neither the author nor publisher assumes any responsibility or liability for any error, omission or contrary interpretation of the subject matter.