Lenders Mortgage Insurance can be a necessary evil when it comes to purchasing a home without the full 20% deposit, but it certainly has it benefits. Having said that, depending on the industry you work in, you may be entitled to a ‘Professional Package’ which means your Lenders Mortgage Insurance fee is waived as well as other discounts.
A lot of clients believed Lenders Mortgage Insurance is an insurance policy that protects them, but it’s not;
What is Lenders Mortgage Insurance?
Lenders Mortgage Insurance is an insurance policy, you pay for, that insures the Bank or Lender should you default on the loan. So whilst you are paying for the policy it is simply in place to protect the Bank or Lender against any losses they may face in the future.
The theory behind it is, if you purchase a property and only put in a minimal deposit then at a fire sale the Bank or Lender may not get all the funds back to repay the debt, at which time they can claim on the Lenders Mortgage Insurance policy to recover that loss.
Who is entitled to the Professional Package?
Banks and Lenders have spent a lot of time and money to research into who the lowest risk clients are so they are able to offer a Lenders Mortgage Insurance waiver and other discounts. In order to qualify for the Professional Package you must;
- Be currently working as; Accountant, Actuary, Auditor, Chief Financial Officer, Director, Finance Director, Finance Manager, Financial Controller, Partner, Lawyer, Solicitor, Barrister
- Be registered to practice as CA, CPA, CFA or FIAA in Australia/Must be registered to practice, verified through evidence of the Practicing Certificate.
- Be on an income of $150k or more
- Be borrowing no more than 90% of the purchase amount
First Home or more
The best part about this discount is it doesn’t matter if you’re borrowing for your first home or building your investment portfolio this will help you to save money and structure your banking long term.
For example, borrowing for your first home, even if you have the full 80% deposit you are able to borrow up to 90% with all the discounts on the interest rate and no Lenders Mortgage Insurance fee which means you can put your additional deposit straight off the loan in an offset account. This means down the track as any unplanned expenses arise (and they always do) you have cash there to pay for it.
If you’re looking to grow your investment portfolio then this is amazing news for you because it means you can now make the loan as much as possible for Tax purposes without additional fees or using all your equity. This may also leave some equity for the next investment purchase and the next.
If you are looking to grow your Investment portfolio make sure you check out my Investor Hub Loan and how it can help set you up for multiple purchases without cross collateralizing your properties.
If you’re a First Home Buyer, thinking about getting into the property market then you need to check out my First Home Buyer resources, from E book to E Courses, it will help you get there sooner.