Waived LMI for high LVR loans - too good to be true?

[skogs]

Hi all. Long time lurker, first time poster etc.

I wonder if anyone has had experience with lenders who offer to waive LMI to borrowers from certain professions (eg doctors) for high LVR loans?

For example Investec advertises 100% finance for owner-occupiers and 95% finance for IPs to people in professions considered low risk. http://www.investec.com.au/professional-practices/professional-services/residential-mortgages.html

My question is... are these loans actually competitive (for those who can get them), or is there a sting in the tail with higher interest rates and associated costs?

I ask because I have a reasonable deposit saved and would ideally like to take out a high LVR loan for an IP and stick my savings into an offset so I can then benefit from the tax advantages when I use those savings as a deposit on a PPOR a few years down the line. As this would be my first IP I am aiming for a conservative strategy where I can comfortably meet repayments even if the property is untenented for a period.

 

[Aaron_C]

They do exist. Are you a medical professional?

 

[skogs]

I am.

Comparing the following two scenarios:

Scenario 1
Deposit: $40,000
Loan $160,000
LVR 80%, no LMI

Scenario 2
Deposit: $10,000
Loan $190,000
LVR 95%, LMI waived
Offset $30,000
Paying interest on $160,000

To my mind the second scenario gives me in essence a $30,000 tax deductible line of credit I could use down the line as a deposit on a PPOR - and not pay LMI. Is the loan itself, however, going to be less competitive (in terms of rates and fees) than a loan I could get for the first scenario?

 

[Aaron_C]

Skogs - depending on the lender, these no-LMI loans can be competitive. However, generally speaking they are not investor-friendly. Most of them have higher interest rates, only waive LMI up to 90% (not 95%), and they force you to pay P&I, not Interest-only.

 

[Rolf Latham]

We do a bunch of 90 % no lmi for medical and allied.

A number of mainstream lenders will do them and absorb the LMI and/or the increased capital cost.

id like to see someone do a prudential 100 % lend on todays environment with someone else's money and no lmi cover............

I dont care how good the borrower is

ta
rolf

 

[Marty McDonald]

For example Investec advertises 100% finance for owner-occupiers and 95% finance for IPs to people in professions considered low risk. http://www.investec.com.au/professional-practices/professional-services/residential-mortgages.html

Hi

I believe INVESTEC fund 80% through St.George and the balance of 15% or 20% they fund themselves. Bit higher % rate I think.

i.e. a combo of 6% pa funds st george and 8.5% pa funds from them = 6.5% weighted on a $400K loan.

It is to get doctotrs on their books so they can fklog them other investments surely. I believe Investec go to uni open days and do presentations to the medical students.

 

[evan1875]

yep the other ones also targeting doctors are bongiorno and doquelle perrett meade (not so much these days)

i am a medical person too and have some 90% no LMIs through one of the brokers here. rates are good. i am in Melbourne and will be happy to chat to you, just PM me.

why they think doctors are good borrowers i don't know.

 

[Shahin_Afarin]

Not all 'medical' professionals are entitled. There are several professions which are restricted from ascertaining the waiver.

 

[Aaron_C]

why they think doctors are good borrowers i don't know.

You're joking, right? Always in full employment, risk averse, always pay their bills - what's not to like?

 

[Shahin_Afarin]

You're joking, right? Always in full employment, risk averse, always pay their bills - what's not to like?

I think he was being a little sarcastic but mostly modest!

 

[jonmardell]

doctors/dentists/accountants and a few other professions can get up to 90% LVR without LMI with a few major lenders. The rates are very competitive and you can negotiate the rates on top of advertised rates as well.

 

[luckyone]

See I don't get why public servants aren't classed the same way (maybe once you get to the higher levels). I mean, I've never seen anyone get pushed out of the public service except via voluntary redundancy. Surely this is regarded as a safe profession once you're past your probationary period?

I just don't get why the rich who can most afford to pay things like LMI get these special deals? It's just like the high paid celebrity's constantly getting free gifts. Just drives me nutty!!!

 

[Terry_w]

What about lawyers?

I hear they have to pay more LMI because of the extra risks involved.