LMI is required in most instances when you borrow more than 80% of a property’s purchase price. Here are some ways to avoid paying the costly premium.
Save for a higher deposit: The purpose of LMI is to protect lenders in case the borrower fails to make repayments. A higher deposit means a smaller loan amount, so will decrease the LVR (Loan to Value Ratio) and the perceived risk, and may be the key to avoiding LMI.
Get a guarantor: If you don’t have the financial capacity to meet a 20 per cent deposit but still want to avoid LMI, you do have the option of getting a guarantor on your loan. Normally a close relative, such as a parent, guarantors can use the equity in their property to help you secure yours. In some instances, having a guarantor on your loan may mean that you won’t need a deposit at all.
Take advantage of professional benefits:
Although special offers based on the borrower’s profession are not limited to medical professionals, doctors are the big winners when it comes to waived LMI fees. Due to the perceived stability and high income, some lenders consider professionals earning a minimum of $150,000 a year as ‘low risk’ borrowers and therefore offer them special loan benefits.Contact Summit Property Finance to see how we can help you get into your own home or purchase that investment property sooner.
