Did you know that it is possible to avoid paying LMI? Most homeowners, investors, and even some mortgage brokers don’t know it’s possible, but it is, and here’s how:
There’s a small clause in many banks’ lending practices that is to be used with low-risk clients or professional borrowers. It allows for interest rate discounts and waived fees because low-risk clients have stellar borrowing profiles. Industries where these discounts apply include:
• Medical professionals
• Finance and accounting professionals
• Lawyers and others in the legal profession
• Engineers and surveyors
• Some mining fields
To qualify for the waived fees, you may have to present your official association membership documents, as well as a minimum income or time spent in your career field. If these details are approved, you could end up saving thousands of dollars. Even if you aren’t approved, you may still be able to discuss options that will help you save money.
For example, you may be able to find a lender that doesn’t use mortgage insurers because they self-insure or underwrite their own loans. The added bonus is that your application process will only involve one step, whereas traditionally, you would have to be assessed by your lender and then your mortgage insurer.
Lenders that self-insure also have more flexibility in regards to risk fees and equity fees. For example, a 90 percent loan on $650,000 might result in a risk fee of $9,000, while a LMI could cost you $15,000.
With these kinds of savings, you definitely want to work with an experienced investment broker who can help you negotiate the best fees, terms, and rates.