Are you a Registered Nurse or Midwife and seeking to get into the property market?
Due to the recognised stability and professional accreditation of your employment, some lenders will now waive the hefty fee of Lenders Mortgage Insurance (LMI). Certain lenders see borrowers of these certain professions as low risk and therefore see it as good business to try and win their business. For Registered Nurses and Midwives, this is a great opportunity to save thousands of dollars and may be the difference in entering the property market sooner.
What is Lenders Mortgage Insurance?
Generally, if you are seeking to borrow more than 80% of the value of the property, you will have to pay LMI. LMI is an insurance policy taken out by the banks to protect them in the instance that you can not make repayments on your loan. This fee is incurred by the borrower and is a once off charge that can either be paid upfront in cash at settlement or added to the total loan amount. This charge is around 2-2.5% of the purchase price so on a $500k purchase, can be $10,000 – $12,500.
What are the benefits of waiving LMI?
- Save on thousands of dollars for a fee that is only protecting the bank
- Purchase with a lower deposit without incurring insurance fees
- Makes a purchase with a 10% deposit more cost effective, thus reducing the need to get to a 20% deposit which will significantly reduce the time to save funds to get into a position to buy
What are the Qualifying Criteria?
- Registered Nurses and Midwives need to demonstrate that they have an active and valid registration through the Australian Health Practitioner Regulation Agency (AHPRA)
- Must be an Australian Citizen or Permanent Resident working full time in Australia
- Subject to meeting the minimum gross income threshold requirement of $90,000 per annum (not including superannuation). This can include overtime/shift allowance payments
- Eligible Registered Nurses and Midwives can have the LMI fee waived when borrowing up to 90 per cent of the property’s value
Case Scenario: Jackie – Registered Nurse
Jackie is a Registered Nurse working full-time in a Melbourne Metropolitan Hospital earning $100,000 plus superannuation. She has been saving for her first home for several years and has managed to save a deposit of $60,000. Jackie’s maximum borrowing capacity is $510,000 and the property she has her eye on is worth $560,000. Using this offer, Jackie can purchase the property with a 10% deposit of $56,000 and take out a loan for the remaining 90% of the purchase price of $504,000.
Usually, borrowing 90% of the purchase price would incur a LMI fee of approximately $14,000, meaning that she couldn’t afford the property due to having not enough cash or borrowing power to fund the fee.
Jackie being a qualified and Registered Nurse, she qualifies for this offer resulting in a saving of $14k in insurance costs and being able to secure her dream home sooner.
If you are a Registered Nurse, Midwife or Health Professional seeking to purchase a property and would like to find out if you qualify for any LMI waiver then please reach out. The power of having a Mortgage Broker on your side will allow you to find out what is the most suitable option for your given circumstances.