Is it possible to bypass Lenders Mortgage Insurance (LMI) with an 85% home loan? 

For an 85% home loan, the qualifying criteria is less strict, and Lenders Mortgage Insurance (LMI) is significantly cheaper compared to 90% or 95% home loans. In some cases, the LMI premium can even be waived! 

Here are two lenders that can assist: 

• Maximum loan of $1,000,000 at 85%. 
• Maximum of $1,500,000 in total loans with no LMI. 
• Clear credit history required. 
• Minimum income criteria may apply with some lenders. 
• This offer is for low-risk borrowers, subject to strict criteria. This incredible discount could potentially save you thousands of dollars in mortgage insurance! 

If you meet strict lending criteria, you might even qualify for a 100% home loan with no LMI and no guarantor, designed exclusively for professionals (higher interest rate applies). 

Am I eligible for a home loan at 85%?

Banks are becoming more discerning about their customers. Here’s what Australian lenders typically look for: 

• Clear credit history: No blemishes on your credit file for the last 6 months. 
• Stable employment: Usually in your current job for the past 6 months or more. 
• Excellent income: Lenders are conservative for loans over 80% of the property value. 
• Strong asset position: Demonstrates good assets relative to your age and income. 
• Genuine savings: Some lenders require evidence of saving 5% of the purchase price. Not every lender demands genuine savings, allowing you to borrow up to 85% without this requirement. If you don’t fit the standard criteria, contact us online to speak with a mortgage broker specializing in loans over 80% of the property value. 

LMI exemption for healthcare professionals.

Healthcare professionals can secure a home loan with no LMI when borrowing up to 85% of the property value. The following professionals are eligible for an 85% LMI waiver: 

• Nurses (PAYG) 
• Psychologists 
• Radiographer & Sonographer These professionals can get up to 90% LMI waived: 
• Physiotherapists 
• Pharmacists 
• Veterinarians 
• Chiropractors

What criteria must be met to qualify?

• Working in Australia. 
• Borrow up to $2 million. 
• Location restricted to Cat 1 & 2 only. 
• Registration verified on the Australian Health Practitioner Regulation Agency (AHPRA) website. 

$1 LMI for First Home Buyers 

A non-major lender is offering a $1 LMI offer for first home buyers borrowing 85% of the property value. Effective from 13 July 2020, eligibility criteria include: 

• First home buyer (one applicant for joint applications). 
• Maximum loan size of $850,000 with an LVR of 85%. (Note: This offer is not an LMI waiver; you’re required to pay $1 in LMI fees, subject to LMI approval.)

Is it better to have LMI waived or negotiate the interest rate?

LMI Premium Rates on an 85% LVR Home Loan: 

• Up to $300,000: 0.70% 
• Up to $500,000: 0.97% 
• Up to $1,000,000: 1.42% 
• Over $1,000,000: 1.53% For loans up to $500,000, negotiating an interest rate might be a better option than focusing on LMI savings. The cost of LMI is relatively low, and an interest rate discount can often outweigh the saving in mortgage insurance premiums. 

For loans over $500,000 or if you can pay off the loan quickly, applying for a lender with no LMI might be the best choice. Once the loan is paid off to 80% of your property’s value or it has appreciated in value, you can refinance to a low-rate home loan. 

Guidelines for borrowing up to 85%

When comparing mortgages for loans over 80% of the property value, consider the following: 

• Meet the lender’s credit criteria, especially regarding genuine savings. 
• Compare LMI rates, as each lender has different premiums. 
• Check if your lender allows capitalizing the LMI premium. Additionally, compare all aspects of the loan, including interest rates, repayment terms, features, and inquire about any hidden fees or charges. 

Is genuine savings a requirement for me?

Some lenders require evidence of saving 5% of the purchase price. However, others consider a gift or lump sum deposit as evidence of savings. In many cases, you can borrow up to 85% without genuine savings. 

What size of deposit is required?

First home buyers typically need around 15% of the purchase price, while second home buyers and investors generally need 19%. The exact amount can vary based on factors like first home owner grants and stamp duty rates in your state.