If you don’t have a six-figure deposit saved - a decent chunk of equity in your existing home loan - there’s a good chance you’ll need to pay lender’s mortgage insurance (LMI).
Unless you work in an industry that qualifies for an LMI waiver, that is.
What’s an LMI waiver? It’s a financial win that could see you buy a home (or refinance your existing loan) without needing to pay this insurance premium.
Essentially, your lender exempts you from paying LMI because they recognise you work in a secure, high-paying industry that will keep you in reliable employment for many years to come.
This has become even more important following the pandemic, as these industries are almost considered recession-proof.
LMI waivers vary among lenders. At UNO, we have access to over 30 lenders, including those with LMI waivers for professionals.
Lender’s mortgage insurance is an expense most borrowers have to pay when they take out a home loan.
It applies to any loan when your deposit is less than 20%, guaranteeing to the lender that they’ll still get paid, even if you stop repaying your home loan.
LMI cops a lot of flack because it’s so expensive, but the reality is, without LMI, many home buyers would be waiting years (or even decades) to save enough of a deposit to enter the property market.
For instance, if you’re buying an $800,000 home with a 10% ($80,000) deposit you will need to pay LMI – a premium ranging from a few thousand dollars to $25,000+. This amount can be paid upfront, or you may be able to add it to your loan to pay it off over time.
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If you meet the criteria and you don’t have to pay LMI, it means you stand to save thousands of dollars – potentially even tens of thousands, depending on the size and type of loan.
If you’re not employed in one of these industries, you may still be able to avoid paying LMI if you’re a first homebuyer and you qualify for the First Home Loan Deposit Scheme (FHLDS). This allows you to buy a home with just a 5% deposit, without needing to pay LMI.
You may also be able to avoid paying LMI if you’re refinancing your loan and your home has grown in value or you have paid LMI previously and the lender you are moving to uses the same insurer.
To find out if you qualify for an LMI waiver on your new home loan or refinance, contact us today.