What is an LMI waiver for doctors?
Doctors and low deposits might seem incongruous, but it is a big market lenders compete for.
Unless you have studied medicine, or know someone who has, you may not know the journey to becoming a doctor can be a long one. As much as doctors have a reputation for being high income earners, it can take a while getting there. Spending money on education, placements and professional development makes saving for a house deposit difficult.
Put simply, the LMI waiver for doctors can make it possible to buy or refinance sooner with a low deposit – in addition to the significant LMI savings.
Lenders mortgage insurance waivers can be an opportunity for eligible medical professionals to buy property with as little as 10% deposit or 5% deposit.
Putting this into dollar terms, waived LMI for someone with a 5% deposit buying near the average Australian house price could mean around $30,000 of LMI fees avoided.
If an opportunity to avoid LMI and save on fees presents itself why not explore it?
See my list of job titles eligible for a LMI waiver for doctors
What are the benefits of a LMI waiver for doctors?
Home loans for doctors can include benefits that extend well beyond any upfront savings from a lenders mortgage insurance waiver.
Save on LMI
LMI waivers for doctors who qualify can result in very significant upfront savings. This is because the LMI fee is largely based on loan size and loan to value ratio (LVR).
For the same loan size, a higher LVR would normally attract a higher LMI premium.
That also goes for if the LVR is the same. A higher loan amount will usually attract a higher LMI premium.
The high earnings capacity for medical professionals can go hand in hand with the approval of large loan sizes. Given larger loan sizes would normally attract higher lenders mortgage insurance costs, any LMI waiver can provide substantial savings.
I have made a graphic showing just how much LMI premiums could be for doctors who borrow at higher loan amounts at different loan to value ratios.
At a house value of $900,000, borrower with LMI waived stands to save over $18,000, or even $30,000.
Given doctors can have high incomes to support larger loans, consider the potential savings with a LMI waiver for a prestige property with a valuation of $2,000,000.
Savings could be in excess $87,000 for borrowers who qualify for a LMI waiver for doctors at this level.
Buy sooner
Home loans for doctors with waived LMI could help eligible borrowers buy a home sooner using a smaller deposit. Compare the size of a 20% deposit to smaller deposit options with an LMI waiver.
For the average priced Australian home around $900,000 they could buy with as little as $45,000 (plus any other fees like stamp duty) and avoid LMI. This can avoid saving the additional $135,000 to get to a 20%. deposit.
For a $2,000,000 purchase price, an doctor qualifying for home loan with a LMI waiver could buy with $100,000 plus fees, instead of $400,000.
Refinance and avoid LMI
Much less discussed are the many refinancing opportunities for doctors.
If there is another home loan better suited to your circumstances, and you do not have 20% in property equity, home loans for medical professionals can offer a refinance home loan option that avoid LMI for eligible borrowers.
Invest in property
LMI waivers are not just for doctors looking to buy a home to live in. Home loans for doctors can also help them purchase an investment property with minimal deposit—and avoid LMI. This can be part of a property investment strategy. Whether that is to build a property portfolio or establish a presence in the market.
LMI waiver for doctors: Checklist
Lenders apply various tests to determine eligibility for any LMI waiver for doctors. I mention some general requirements in this checklist, but each lender will have their own. Speak to a professional for any specific criteria that applies to your circumstances.
Professional memberships
Home loans for medical professionals often require the individual to show registration with the relevant professional body. A LMI waiver for doctors usually requires registration with the Australian Health Practitioner Regulation Agency (AHPRA).
Income levels
Minimum income thresholds to support an application for an LMI waiver is less commonly seen in home loans for doctors compared to other industries.
Debt to income ratio is another assessment performed by lenders to limit their exposure to any one borrower. This measure factors in overall income within an application compared to overall debt expressed as a ratio.
Loan types
Investment and owner-occupied loans are both considered under most LVR waiver policies.
Refinances home loans as well as purchases are considered for LMI waivers.
Lenders might apply limits to the loan amounts, LVR or repayment types as part of approving a LMI waiver. For example, investment lending could be considered for interest only repayments whereas owner-occupied lending could only have a principal and interest repayment option.
How doctors can qualify for a LMI waiver
A common starting point to qualify for a LMI waiver is for lenders to understand the job role of the individual.
Just like the path to becoming a doctor, the qualifying criteria for a LMI waiver for doctors can be strict. This means the LMI waiver for doctors will generally be available only for doctors and related medical professionals—exceptions, while possible, are rare.
I provide a list of occupations that might qualify for a LMI waiver for doctor below. Treat it as a guide only and do not rule yourself in or out based on this list.
Occupations typically eligible for a LMI waiver for doctor are:
- Doctor
- General Practitioner
- Medical Specialist
- Anaesthetist
- Cardiothoracic Surgeon
- Clinical Pharmacologist
- Cosmetic Surgeon
- Dermatologist
- Ear and Throat Surgeon
- Emergency Surgeon
- Endocrinologist
- Gastrointestinal Surgeon
- Gastroenterologist
- Gynaecologist
- Haematologist
- Hepatologist
- Immunologist
- Nephrologist
- Neurosurgeon
- Neurologist
- Obstetrician
- Oncologist
- Ophthalmologist
- Oral and Maxillofacial Surgeon
- Orthopaedic Consultant
- Otolaryngologist
- Paediatric Surgeon (neonatal and perinatal)
- Pathologist
- Plastic Surgeon
- Psychiatrist
- Radiologist
- Reconstructive Surgeon
- Respiratory or Thoracic Surgeon
- Urologist
- Vascular Surgeon
Speak to a professional as part of any initial enquiries to find out what home loans might be available for your specific job role and circumstances.
How can I apply for a LMI waiver for doctors?
If you want to know if you are eligible for a LMI waiver speak to a mortgage broker or your lender—or both.
Home loans for doctors should suit your circumstances, not chosen not solely based on a LMI waiver.
FAQ’s
I am not a doctor. Can I get a LMI waiver for professionals?
Yes. There are other professions, besides doctors, for which opportunities to avoid LMI exist. I have another article that provides a list of professions lenders will consider waiving LMI for.
Can I borrow with my spouse and still access a LMI waiver for doctors?
Yes. The assessment for an LMI waiver for doctors centres mainly on the medical professional. But they commonly borrow with a spouse. Some prefer to guarantee the lending and not be the borrower for asset protection reasons.
Any structure relating to asset protection would been consider and early legal and financial advice.
Final word
Home loans for doctor present an opportunity for eligible borrows to avoid LMI. In addition to any fee savings, doctors could find themselves in a position to buy sooner, and with a smaller deposit than they might realise.