15 May, 2020
Home loans deals are not always one-size-fits-all. Different professionals have different personal needs and situations that could change the way their home loan is structured.
For some of Australia’s healthcare professionals, their career stability and dedication to trade has encouraged some lenders to create certain features that may help them to more easily manage their home loan and save money.
Many companies have made moves to support these essential workers and lenders and mortgage providers are no different.
Let’s discuss some of the special benefits that some of these hard-working health professionals could enjoy.
Healthcare professionals are often regarded by financial institutions as low risk, high return customers. Their incomes are considered to be very stable, with a likelihood of increase as time goes on. Additionally, they can be likely to return with further investments and business loans later on. For these reasons, they are often preferred by lenders.
As valued customers, they may be eligible for certain benefits that other customers may not be. By checking on these benefits and making sure their financial and employment situations make them eligible, they could end up saving themselves a lot of time, stress and money.
Healthcare professionals could be one of the few people who qualify for a Lenders Mortgage Insurance (LMI) Waiver, which means that they can avoid paying these costs on their home loan. This could save these borrowers a lot of money and stop them from having to pay something that does not benefit them at all financially.
Healthcare professionals may receive a LMI Waiver, even if they are borrowing 100% of the property value. Any healthcare professional borrowing over 80% of their property’s value should be sure to ask about this benefit.
Most medical professionals usually qualify for a LMI Waiver. Those eligible could include:
Experience level is irrelevant, and interns and residents also qualify for this benefit in the eyes of some lenders.
Although these claims are reviewed on a case-by-case basis, it is unlikely for some medical professionals to qualify for a LMI Waiver. This can include psychologists, medical research scientists, and naturopaths. Unfortunately, this is because they are often regarded as higher risk, according to a statistical analysis of existing loan portfolios by certain banks. They may, however, qualify for other unique benefits.
Some lenders may offer specific home loans for medical professionals. This includes Auswide, Bank of Melbourne, St George and Westpac (among others). They may also help medical professionals with their finances in other areas including business support services, superannuation, insurance premium finance and fitting out a practice.
Aside from a LMI Waiver, medical professionals could be entitled to a range of other benefits because of their low risk status.
Healthcare workers may enjoy special discounts on their interest rate or fees. This could include a home loan fee waiver that is exclusive to medical professionals. These discounts are greater if they are borrowing less than 80% of the property value.
Usually, this will be based on whether the professional has a strong employment history and a good amount of savings.
The discounts exist because many lenders believe medical professionals to be valuable customers, so by offering competitive rates they hope to secure their business.
Banks may allow healthcare professionals to borrow larger amounts than standard. They could be allowed to borrow up to 90% of the value of the property they plan to purchase, however, it’s not guaranteed that they would be able to secure a LMI Waiver. Borrowed amounts could be up to $4.5 million, or even more under certain circumstances.
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Other benefits that medical professionals may receive include the opportunity to build their property portfolio in a shorter amount of time and asset protection if they purchase in a company or trust structure.
Nurses may not be eligible for some of the benefits that other healthcare professionals are, however, they could be entitled to their own benefits if they choose the right home loan deal.
Similar to doctors, they may be able to waive their LMI if they borrow up to 85% of their property’s value and have proof of a stable income. They could also get discounted interest rates as long as they are borrowing over $250,000 or have applied for a professional package.
Nurses who are first home buyers could also get a discount of up to 15% on their LMI premium with some mortgage providers if they are borrowing less than $600,000 and their deposit is not from a borrowed source. They could use the First Home Owners Grant (FHOG) as their deposit if it is enough.
If they want to reduce their LMI premium, there are a number of things to consider.
First, is the size of their loan, as the larger it is, the more they will pay for insurance. Similarly, the percentage of the property value they are borrowing could also push their premium costs higher. They will also need to make sure they choose the right lender and mortgage insurer as they don’t all have the same premium costs due to the different things they tend to consider in the assessment process.
Nurses may also be able to borrow up to 95% of their property purchase price if they have a clean credit history, stable employment, good income, minimal debts and are not buying an unusual property or in a remote location. They would need at least 5% genuine savings, or funds they have saved over time if they choose to borrow more than 80% of the property’s value.
To be eligible for a 100% home loan with no LMI and no guarantor, they would need to have a high income and to have accumulated at least three years experience in their industry. It’s important to note that these loans have high-interest rates and are not suitable for everyone.
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As essential workers, their overtime could also be accessed when lenders consider their income if they choose the right one. They will need to provide enough proof of how much overtime they do in the form of an employment letter confirming payment for overtime and the time period they have been receiving this income, two of their most recent payslips and their most recent group certificate.
If nurses can show that they have worked for their second employer for at least 6-12 months and have been earning a regular income during that time or even less than three months if they are in a strong financial position and have a good credit history, 100% of this income may be accepted by some lenders.
In terms of fringe benefits, that is, non-taxable income, some lenders could make the mistake of including this as taxable income. This can drastically reduce the amount you’re eligible to borrow. Since others could consider this income as tax-free, it is important to check where your lender stands on this.
A nurse may be able to get a home loan even if they are on probation, although it may be a bit difficult if this is the case. If they meet all the other standard criteria, they may still be able to borrow up to 95% of the property value. Since lenders tend to prefer that their customers have stable incomes, it is necessary to be positive that you have stable employment before applying for a home loan.
Many medical professionals with a profession in the LMI waiver eligibility list (above) may have unusual income structures and therefore, their eligibility for benefits may not be accepted by all banks. Some factors include if they are contractors, self-employed, part of a partner-style business or are receiving medicare income guarantees.
Healthcare professionals also need to be a member of certain associations to get these benefits. Some of these association include:
Other associations may be accepted on a case-by-case basis.
Partners of medical professionals could also qualify for a home loan with these benefits if they are borrowing together, however, this will be completely dependent on whether their partner is in the eligibility list.
Healthcare workers can be in a unique position when looking to find a home loan and should be aware of the benefits they could have. As long as they choose the right lender and ask the right questions, they may be able to use these benefits to their advantage and get ahead in the property game.
Words by Jessica Testa
If you need help with your home loan, give eChoice a call! Our experienced brokers can help with finding the right loan for you and your situation.