LMI Free Loans

Avoiding Lenders Mortgage Insurance (LMI) is not just a game for first home buyers, but something we always want to achieve.

At Allora Finance, we consider being a ‘tight ar$e’ as an occupational hazard… basically, we hate paying for what we don't need. So, if there's a way to avoid paying LMI, we’re certainly going to be considering it for you. In saying that, LMI serves a purpose and can help you get into the market sooner.

Generally speaking, when your deposit represents 20% of the purchase price plus any upfront costs (like application fees or stamp duty), you'll be able to avoid lenders mortgage insurance. Occasionally, restrictions on location or property type might require that you have a larger deposit, or lenders might be offering special deals where, for example, a 15% deposit plus upfront costs might suffice.

Here are some great ways to avoid LMI:

Using a guarantor

Most popular with first home buyers, the use of a guarantor can help family members avoid paying lenders mortgage insurance. This option can come in handy when you don’t meet government grant criteria - for example your purchase price or household income is higher than the limits acceptable under government schemes.

Leveraging a government scheme

The Australian federal government, under the Housing Australia Home Guarantee Scheme, offers 3 different programmes for avoiding lenders mortgage insurance.

The First Home Guarantee: designed to help first home buyers, and requiring a minimum deposit of just 5% (plus any purchase costs), to secure your first time without paying an LMI premium. This scheme is available for the purchase of existing dwellings.

• The New Home Guarantee: also designed to support first time buyers with a minimum 5% deposit (plus any purchase costs), this variation of the scheme is available for the purchase of brand new property only - for example an off the plan purchase, or for land and construction projects.

• The Family Home Guarantee: this option is exclusively available to single parent or guardian, who are the primary carer to at least one child under the age of 18 years. Under this framework, applicants are not restricted to just first home buyers, and the minimum deposit requirement is just 2% (plus any purchase costs).

• Eligibility criteria for each Home Guarantee Scheme option is quite complex, and touches not only on citizenship, but income and relationship status, as well as previous purchase history, to name a few. The Allora Finance team have helped many clients across the years successfully secure a spot in the Home Guarantee Scheme and look forward to helping you understand your eligibility.

Taking advantage of professional waiver

Selected professions and qualifications can make you eligible for an LMI waiver. Generally speaking, these offers are made available to selected medical or legal professionals (doctors, dentists, nurses, vets, accountants, lawyers to name a few) and can support the purchase of owner occupied or investment properties. Because the rules vary so dramatically from lender to lender, it's highly advisable to speak to the Allora Finance team to understand if your exact qualification, current employment and/or income level, make you eligible for these offers.

Taking advantage of a lender promo

Lenders can also offer loans with no LMI. This sometimes happens as a marketing promotion (historically, we can cite a lender promoting LMI premiums capped at just $1 when you had a 15% deposit) and other times is part of their lending policy (we currently have a lender on panel offering 85% loans with no LMI). No matter the option, application criteria applies - best to talk through your circumstances.