With the increasing demand for people to purchase properties to have a home that belongs to them, the prices of properties are also going high. This inflation is making it difficult for individuals to save a deposit which will be enough to purchase a home.
Home buyers who are unable to meet the deposit amount required to purchase a property are left with only one solution, which is to purchase a home with a low deposit and pay lenders mortgage insurance. Read on to understand what LMI is and the ways you can follow to avoid paying it with the help of a finance broker in Sydney.
What Is LMI?
LMI is referred to as Lenders Mortgage Insurance. This is an insurance type that protects the lender against any loss and not the borrower. Basically, the coverage under this insurance is for the lenders in case the borrower defaults on their home loan repayments.
LMI is usually applied to people with a loan-to-value ratio greater than 80%, as these individuals are a great risk to lenders. This means to purchase the property and at the same time avoid paying LMI, you would be required to have at least 20% of the property deposit.
Ways To Avoid Paying LMI
If you are seeking home loan pre-approval and wish to accelerate your loan repayments to clear out the loan when it is approved then following the ways to avoid paying LMI may help.
Check Your Eligibility
If you have a professional doctor, dentist, accountant or engineer, then you may be eligible to get a waiver on LMI for home loans in Sydney.
Generally, lenders offer certain discounts and conditions for people who are in these professions and require home loans in Sydney. The reason why these professions are able to avail of these offers is that these professions tend to earn higher incomes than all the other professions. This puts the lenders at a low risk of default payments for home loans.
Even though the type of profession and the discounts individuals can benefit from depends upon different types of lenders, they may still be able to have a waiver on LMI for home loans with the help of a finance broker in Sydney.
Compare The Lenders
One of the best ways to avoid paying LMI is to ensure that you compare the lenders as you walk on the journey of getting home loans in Sydney.
Depending upon the lender, you may get a discount or direct waiver on LMI to purchase the property you like. If the lenders consider you an eligible borrower, they may allow you to avoid LMI with a deposit that is as low as 155 rather than 20%.
Use A Financial Present
If you are able to get gifted money, then getting a waiver on LMI might become easy for you. You can use the money given to you as a present and add it to your deposit for purchasing a home with the help of a finance broker in Sydney.
However, it is essential that the money you receive is just present and you are not required to pay it back. Financial presents are usually considered as non-genuine savings. Therefore, if you are able to show that you have non-genuine savings that you can use as a deposit, then you may not be required to pay LMI.
Search For A Government Scheme
Many government schemes are built to help home buyers purchase a property in favourable conditions. If you are unable to have enough debt to help you avoid paying LMI, then you can apply for a government scheme with the help of a finance broker in Sydney to help you through this problem.
These are some of the ways you can follow to avoid paying LMI and get the home of your dreams with the help of a finance broker in Sydney. Make sure to discuss the conditions of the lenders and the discounts they provide before selecting one.
