How to avoid paying expensive LMI premium?

When the loan amount is higher than 80% of a property’s purchase price, the lender considers those loans carry a high risk, so Lender’s Mortgage Insurance (LMI) is likely payable. How could you avoid in paying that expensive premium?

Save for a higher deposit The purpose of LMI is to protect the lenders in case the borrower fails to make repayments. A higher deposit means a smaller loan amount, so will the LVR decreased and the risk that the lender having does decrease. It is one of the options for avoiding paying LMI.

Get a guarantor If you wanted to purchase a property and you haven’t saved up the 20% of deposit yet, the other option to avoid paying LMI is to getting a guarantor on your loan. The guarantor has to be a close relative, such as a parent. Guarantors can use their property equity to help you secure yours. It also means that 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 are earning a minimum of $150,000 a year as ‘low risk’ borrowers and therefore offer them unique loan benefits.

Come to speak to Kevin Poh on 0415820016 to see how he can help you avoid expensive LMI premium.