No LMI for first-time homebuyers Yes, first-time homebuyers can be exempted from the LMI if you qualify for the deposit plan for your first home loan. The national plan is designed to help first-time homebuyers enter the housing market with a deposit of just 5% without paying mortgage insurance to lenders. Each insurance provider calculates LMI premiums slightly differently depending on a number of factors, such as the size of the loan, the amount of the deposit, the type of loan, and the borrower's employment situation. You can also avoid paying the LMI if you are refinancing your loan and the value of your home has increased or if you have already paid the LMI before and the lender you are moving to uses the same insurer.
You can use the commission estimators on the Genworth Financial and QBE websites to determine the amount of LMI you should pay. This could help first-time homebuyers qualify for a non-LMI mortgage loan, or at least reduce the amount they pay for LMI home loans. In other words, lenders generally require borrowers to have at least a 20% deposit (plus funds to pay associated costs, such as stamp duty); however, the LMI allows lenders to approve loans when borrowers do not have a 20% deposit and when the LVR is above 80%. If you're not on the list of preferred professionals or don't earn enough income, you might stick with the LMI.
Therefore, professional athletes, financial managers and quantitative surveyors should apply for an LMI exemption to improve their financial situation. This is especially true for those with small deposits; it's unlikely that you'll be able to pay the LMI fees in a single lump sum. All professionals in the medical, legal, accounting, sports, entertainment and mining industries could qualify for an LMI exemption. Lender's mortgage insurance (LMI) is an additional cost that lenders and banks demand when homebuyers don't have a significant deposit.
If the borrower defaults on their mortgage loan payments but has an LMI premium, the mortgage insurer will repay the loan amount. To get an idea of the value of LMI premiums, Insurance Business tested the LMI fee estimator from insurance giant Genworth Financial. These include doctors, dentists and lawyers, who are considered low-risk borrowers and may even be eligible for an LMI exemption.
