For a long time a small group of professionals have had access to benefits from selected financiers. These included wealth packages, discounted rates and fee options. But none of them were as enticing as the capacity to borrow up to 90% of the value of a property without having to pay Lenders Mortgage Insurance (LMI).
LMI is one of the most common ways to achieve the dream of home ownership sooner, without ready access to a large deposit. Over 2 million Australians have used LMI to help enter the property market.
LMI is taken out to protect the lender in the event of default by the borrower. In Australia it is generally required when the borrower does not have a 20% deposit.
Whilst it is a great option for many to help them enter the property market it can be very expensive. Therefore, there are significant cost savings by not having to pay LMI.
Up until now only those within the medical field could borrow up to 90% of the value of a property without having to pay LMI. But with the current market conditions this is set to change.
Greater competition and a better understanding of individual industries has led to some banks absorbing LMI in the following industries:
- Accounting – accountants, finance managers, auditor, actuaries
- Legal – lawyers, solicitors, barristers
- Mining – Engineers, Surveyors, mine Surveyors, Quantity Surveyors & Geologists/Geophysicists.
According to Phil Wigley, Director of Finance at Perks Integrated Business Services “Certain financiers view these industry professionals as lower risk, they have good income prospects and also are more likely to take out multiple loans during their lifetime as they build their wealth. They are regarded as a safer long term investment for a financier”.
But what does this mean in actual savings? For those in one of the above mentioned professions the savings are considerable. If purchasing a house with a median house price of $534,000 they could save up to $9,419 in LMI.
Apart from normal lending criteria that has to be satisfied (such as borrowing capacity, clean credit etc); the criteria to apply for no LMI is two fold. The professional needs to be both in an ‘eligible profession’ and also a member of an ‘eligible association’ for that profession such as the Institute of Chartered Accountants of Australia.
For more information on how to take advantage of this benefit or for any other finance enquiries please call the Perks Finance team on (08) 8273 9223.
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