LMI Waiver for Lawyers in Australia

If you have read our previous blog, Who Qualifies for LMI Waivers, you may also benefit from this one, where we explore how lawyers in Australia can specifically benefit from LMI waivers to secure an affordable home loan for themselves. We take a closer look at eligibility and application processes at major banks.

Click here to speak to one of our mortgage brokers today to find out if you can waiver LMI.

LMI Waiver for Lawyers in Australia

If you are a legal professional, for example a lawyer who wants take out a home loan, you are likely to apply and get approval for a higher loan, and be eligible for discounts with minimal risk to the lender.

Therefore, as a potential high-paying customer, lenders will offer you an LMI Waiver which means that you will be able to buy your desired property without making a significant deposit, and also save thousands of dollars in LMI and other fees.

An LMI Waiver will enable a mortgage broker to negotiate lower interest rates and other discounts for you, since lenders use it, as well as flexible credit criteria, to attract and retain legal professionals. Lawyers with a higher loan-to-value-ratio (LVR) can often borrow as much as 90% of the property’s value without paying LMI.

Understanding LMI and Its Waiver - What is LMI and Why It Matters for Lawyers?

When you apply for a home loan, the lender will calculate your LVR to determine how much they are willing to lend you against the value of the property you want to buy.

A low LVR is good, however, should the average person not be able to pay a 20% deposit and consequently want to borrow more than 80% of the property value, lenders will consider it to be a higher risk.

In this case the lender will add a one-off, non-refundable and non-transferrable Lenders Mortgage Insurance (LMI) premium to the home loan, as an extra level of protection. The LMI will protect the lender against any loss, should the borrower not be able to repay their loan.

Nevertheless, although LMI is a one-off fee, it can be extravagant, for example:

A first-time buyer in New South Wales who wants to buy a house worth $500,000, will need to put down a deposit of $100,000 (20% of the property’s value). If they only saved up $50,000 and want to borrow $450,000, they may have to pay LMI.

Using the above suggested example to calculate the LVR, the loan amount is divided by the purchase price, then multiplied by 100.

$450,000 ÷ $500,000 = 0.9 x 100 = 90%

This means that they want to borrow more than 80% of the purchase price, so they may have to pay LMI of $7,003 to $10,483. Most lenders prefer to add this to their total loan amount so that they can pay it off as part of their monthly repayment amount. Alternatively, it can be paid in full at settlement.

However, if you are a legal professional such as a lawyer, who earns a sufficient income to support a loan, you may be able to capitalise on LMI. The legal profession offers job security and a professional status. In addition to that, historical data shows that legal professionals have lower default rates on loans.

With an LMI waiver for lawyers you will not have to pay any of the abovementioned extra costs, which is a potential saving of $7,000 to $40,000.

Eligibility for LMI Waivers - Eligibility Criteria for Lawyers in Australia

Should you want to apply for a home loan, your line of profession, as well as your high income and long-term career prospects put you in a favourable financial position to be eligible for an LMI waiver. But what does eligibility involve?

Criteria for Legal Professionals:

Lawyers who are Australian permanent residents or citizens, living and working in Australia and earning a gross income of $150,000 or more, may be able to qualify for the LMI waiver for a home loan of up to 90% of the property value, if they have a 10% deposit.

They must produce evidence of their degree and industry membership, as well as their current practicing certificate that permits them to practice in their State or Territory. The certificate must have been issued by the following state or territory bodies:

• Victorian Legal Services Board

• Law Society of the Australian Capital Territory

• Law Society of New South Wales

• Law Society of Northern Territory

• Law Society of Queensland

• Law Society of South Australia

• Law Society of Tasmania

• Legal Practice Board of Western Australia

Owner-occupied or investment purpose of the property. Self-employed lawyers will be accepted if their last year’s taxable income was $150,000 or more. The loan amount may not exceed $2,000,000.

A lawyer couple who don’t individually earn an annual income of $150,000, but have a combined income that exceeds $200,000 may still be able to apply for the LMI waiver.

Specific Requirements for Different Legal Roles

Home loan eligibility criteria for lawyers also apply to other legal professionals and they are able to apply for the LMI waiver if their annual income exceeds $150,000.

When a judge or magistrate applies for a home loan, apart from the abovementioned requirements, they must also provide a copy of their current commission or letter of appointment, or another document, confirming that they are a judicial officer (for example, a recent payslip or tax return).

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