5% Deposit & No LMI (Lender’s Mortgage Insurance)
Typically, if you borrow more than 80% LVR (Loan to Valuation Ratio, i.e., more than 80% of your property purchase valuation) in Australia, it is considered as risky loan transaction by lenders and your mortgage needs to be insured to protect the lender giving you money in the event you default (i.e. do not pay your mortgage). This insurance is called Lender’s Mortgage Insurance (LMI) and will be required to LMI fee (premium).
In other words, Lender’s Mortgage Insurance (LMI) is insurance that protects lender in the event you default (i.e., do not pay your mortgage) but you need to pay LMI fee or premium and you get no benefit out of this insurance.
LMI fee can be thousands of dollars (say $15K, $20K or $35K or even higher) depending on loan amount, property location, LVR (90%, 95% etc) and few other factors, so it is best to avoid, where possible. We are here to help to you avoid this LMI fee.
You can avoid LMI fee if:
1) You are a first home buyer, or
2) Work in a professional field like medical, accounting, lawyer etc, or
3) Employee of a bank, or
4) Have 15% deposit
As a first home buyer or someone buying their home after 10 years, you can be eligible for LMI waiver ( that is you do not need to pay LMI ) if you meet the following 3 conditions.
a) You are Australian PR, Citizen or NZ citizen, and
b) Last financial year income was less than $125K for a single or $200K for a couple
c) Buying a property below specified threshold such as it is $900K for Sydney, $800K for Melbourne
Please reach out to us if you need any more information or like to avoid paying lender’s mortgage insurance.
