An LMI waiver refers to the waiving of Lender’s Mortgage Insurance (LMI), which is a type of insurance that protects a lender in case the borrower defaults on a home loan. A waiver is often referring to the voluntary surrender of any legal rights or recourse that an individual or organisation has for making a claim that they would have previously been entitled to. If that sounds scary and dangerously legal, don’t fear!
In this case, the lender is the one doing the waiving — an LMI waiver means that the lender is willing to forego this particular insurance requirement. This is great news for anyone who may be struggling to come up with a 20% deposit, which has been the benchmark savings goal for first-time buyers who’ve been unable to avoid the expense of LMI without the help of The Bank of Mum and Dad or a Guarantor Home Loan.
To add to that woe, insurance is traditionally paid for by the party requiring the insurance, but this isn’t the case with LMI — this is the lender’s insurance against the borrower defaulting. They, the lender, require it as part of your loan arrangement and you have to pay for it.
So, an LMI waiver means you don’t have to pay for the lender’s insurance AND the lender has no legal recourse if you default on your payments (but don’t get too excited — they can still foreclose). I think you’ll agree that’s a win/win situation.
With that in mind, this makes qualifying for an LMI waiver an exciting prospect. So, how does one find out if they’re eligible and what are the special circumstances, if any, that LMI waivers are given under?
If you’re in the audience at an afternoon LMI waiver game show, you might be wondering how you get picked to get on the big screen. That roaming spotlight might just stop on you if you:
Lenders might also offer LMI waivers as part of a limited-time offer or special lending promotions. New wave lenders like Sucasa have designed their offerings specifically to reduce the deposit barriers of home ownership. These loans have lower upfront costs than traditional loans with LMI, and don’t require borrowers to take out LMI policies at all. Sounds pretty appealing right?
Saving for a 20% deposit can take years, during which time property prices are likely to continue to increase, making it even more challenging to save the required 20%. Having to fork out for LMI can eat into your deposit by thousands of dollars — and the reason you’re having to get LMI in the first place is because you’re short on your deposit by thousands of dollars. It’s a real catch-22 for first home buyers.
But what you now know is that LMI waivers are available to those who qualify! So, armed with that knowledge, and the fact that Sucasa provides an alternative to forking over thousands that could be directly used toward getting you into your new home, why would you wait?
