Professional Package Loans
Welcome to the finance update for the week ending 14 October, 2023.
Data revealed by the International Monetary Fund (IMF) earlier in the week indicates that Australia holds the dubious distinction of having the highest mortgage stress among developed nations.
The increased cost of borrowing has left Australia at the top of the league for debt with Canada second followed by Norway and the Netherlands. Since the IMF data was captured, there have been a further four rate increases. Talk of yet another increase when the RBA next meet on Melbourne Cup Day will have borrowers feeling very anxious.
In this week’s newsletter, we take a look at how some highly paid professions can access preferential treatment on standard home loan rates and requirements.
Before lending money to any borrower, every financial institution will consider a loan applicant’s financial history and credit record to determine their ability to repay the loan amount. In some instances, they also take into account the specifics of your occupation.
Why the preferential treatment?
Certain borrowers are seen as lower-risk by lenders, and in-turn, receive special consideration. If you’re a Doctor, Dentist, other medical professional, Account, Lawyer or in other highly-paid professional career, you could have the option of saving thousands on a home loan.
Some lenders offer specialist home loans for professionals with a range of attractive discounts, including discounted fees, better interest rates, higher loan-to-value ratios (LVRs) and the ability to avoid lenders’ mortgage insurance (LMI) payments altogether.
Lenders Mortgage Insurance Waiver
One of the biggest benefits such professionals can receive is having the requirement for Lenders Mortgage Insurance waive, which is an often significant cost that comes into play for borrowers who have less than an 80% deposit.
Qualifying for a LMI waiver usually requires the borrower to certify that they are an industry professional by submitting proof that they are a member of reputed industry associations.
Depending on the profession, the borrower may also need to earn above a minimum income level to be eligible for LMI waivers – typically above $150,000.
How much can be saved?
Any changes in interest rates from last week are highlighted in orange.
Note – Increases announced by lenders as a result of RBA decisions normally take 1-2 weeks to come into affect.
The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR.
1 Year Fixed
The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR. At the end of the three year fixed period, the borrowers interest rate will revert to a standard variable rate for the life of the loan.