The expenses with buying a home can usually stack up and make it hard to handle. It's especially overwhelming when it's your first time trying to get a property of your own. Thus, homebuyers are recommended to try and decrease the costs that they're set to cover as much as they can.
The lenders' mortgage insurance or LMI is one of the charges lenders usually ask for from those who want to borrow their money for a property loan. This only happens when the borrower has a lower deposit than what's average for the lenders' protection. It is possible to reduce this additional expense for your personal savings.
Here's part one of the various methods that can lower Lenders' Mortgage Insurance expenses:
1) Qualify for an LMI Waiver
An LMI waiver is a very convenient option for homebuyers who have just started their home loan. Lenders give this waiver to those who have 80% LVR or lower and people in the professional industry like (doctors, Lawyers, Accountants, Dentists, Engineers) can borrow upto 90% LVR with zero LMI payment. To be eligible, you generally need to be earning at least $150,000 a year. You also need to be a member of your industry's peak body or authority, such as the Australian Medical Association.
2) Look Into the FHLDS
If you can't qualify for an LMI waiver, perhaps you can get into the First Home Loan Deposit Scheme in Australia. The FHLDS is a program created by the Federal Government that allows eligible first home buyers to purchase a home with a deposit of only 5%.
The requirement for the FHLDS is primarily having a household income that's an average of $130,000 and below. Any applicants must also meet the eligibility requirements of the program and submit their documents prior to getting the home loan.
3) Try to Get a Guarantor
There are two types of guarantors in Australia, a Servicing Guarantor and Security Guarantor. Security guarantors will help you avoid paying LMI, while a servicing guarantor will help you borrow more.
Saving for your home-buying deposit can be challenging, especially if you’re renting. A security guarantor home loan can be the solution for you.
Security guarantor on your mortgage is the person that provides the additional leverage for your home loan. Lenders prefer the guarantor to be a close relative – usually parents, grandparent, or siblings. The guarantor does not need to provide any cash payment.
4) Negotiate with Your Mortgage Broker
A mortgage broker is a paid licensed professional who help you look for more affordable home loans. They can obtain a better deal on your home loan.
If your lender also doubles up as a mortgage broker, try talking to them about your options directly. They might be more willing to help out in lowering the LMI amount, providing a considerable discount under certain terms and conditions.
Lowering your LMI expense is definitely possible to do. You can try and work with your mortgage broker and your lender to see if they can work together and provide you with a better deal. Stay tuned to part two for more techniques.
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