Home loans for Lawyers
If you work in the law industry, you may be eligible for discounts and special rates on your home loan and flexible lending criteria when funding your legal practice.
Lawyers, barristers and solicitors all qualify for discounted rates on their home loan and other legal professionals are taken on a case by case basis. Law professionals can potentially qualify for a home loan of up to 90% of the property value without needing to pay Lenders Mortgage Insurance (LMI).
On top of this, other special terms include higher exposure limits when having multiple investment properties, flexible credit criteria, a higher maximum loan size ($2.7 million against the typical $2 million) and the home loan can either be in the name of a company or trust structure.
What are the eligible occupations for the LMI waiver?
Other professions besides lawyers, solicitors and barristers are also eligible for an LMI waiver (assessed on an individual basis).
These professions include:
Lawyers, solicitors and barristers
Medical professionals such as doctors, dentists, vets and optometrists
Accountants, actuary, auditors, director, partner, finance controller
Why do banks give lawyers special treatment when getting a home loan?
The purpose of LMI existing is to protect the lenders against the possibility of default by its mortgage customers, the borrowers. However, legal professionals such as lawyers, barristers and solicitors are known to be low risk borrowers because of their income. Similarly, newly graduated legal professionals will often soon be on a great career prospect with a high income. Lenders have taken notice that as a professional in the law industry, the chances of defaulting is quite low. Because of this, lenders are more prepared to consider waiving the LMI premiums for those practicing law.
How much do I have to earn to be eligible for waived LMI?
The waived LMI is offered by some lenders, each with their own income criteria and requirements. Generally, you must be earning a minimum of $150,000 per year in NSW, ACT, VIC and QLD. In WA, SA, NT and TAS, the qualifying income is a minimum of $120,000 per year.
This number can also include any income you earn from rental properties but cannot include any income made by your spouse, unless they are also practicing as an eligible legal professional (lawyer, barrister or solicitor). If for some reason you happen to not meet the income requirement (including that of you, your spouse’s income and any rental earnings), then your total income must be at least $150,000.
You might also like: Understanding Lenders Mortgage Insurance
How much can be saved with waived LMI?
LMI is charged as a fee to the lender when you want to borrow over 80% of the property value. This can quickly add up depending on how much you need to borrow over that 80% threshold. For example, an 90% loan on a $1,000,000 property would mean you have to pay an extra $24,000 for LMI. For those working in the law industry, having LMI waived is very advantageous and can potentially save you tens of thousands of dollars to put towards other expenses.
Do I have to be a member of an association to have my LMI waived?
Most lenders require you to be a member of an industry association. Other industry bodies are also accepted on a case by case basis. Several lenders do not require evidence of any association membership, but they will need a copy of your degree or any evidence you can provide to show you are currently practicing or working in law in order to have LMI waived and get access to other special benefits.
Industry associations include:
Law Council of Australia
Law Society of NSW
Law Society of South Australia
Queensland Law Society
The Australian Bar Association
Law Institute of Victoria
Australian Labour Law Association
Australian Corporate Lawyers Association
The Commercial Law Association of Australia
Australian Insurance Law Association
Acceptable forms of evidence can be provided to the lender, and can either be a receipt for payment of an annual membership, any current valid membership card, written confirmation from the listed association stating the borrower is a member of the industry association, or a practicing certificate.
Are Judges and Magistrates eligible for waived LMI?
Judges and Magistrates can also be eligible for the LMI waiver but they must meet the same income requirements as lawyers, solicitors and barristers. They must also provide evidence that one or part of their employment conditions means they are prohibited to hold a Practicing Certificate.
What about government lawyers?
Lawyers that work for the state or federal government are eligible to receive the same benefits as lawyers who are privately employed or running their own business. However, most government lawyers often do not meet the minimum income requirements for no LMI loans. Still, it’s essential to note that government lawyers can still be eligible for an interest rate discount.
Why should lawyers use a mortgage broker?
As a member of the legal profession, lawyers are entitled to a variety of special benefits on their home loan or investment property loan, such as the ones listed above. However, lenders typically don’t tend to advertise these benefits publicly unless asked. As the home loan experts, mortgage brokers are at an advantage to explain what you may or may not be eligible for. They also know which lenders offer LMI savings to legal professionals, and can progress with all the necessary negotiations on your behalf to help cut the cost of LMI.
Are there any restrictions or fine print to be made aware of?
You may run into some restrictions when trying to apply for waived LMI home loan. Some restrictions may include:
The amount of income you earn
If you’re applying for Interest Only lending
The postcode of your property and property type
Maximum loan size as a multiple of total income
If you intend to purchase the property with one or more other borrowers, you will need to hold at least 50% interest in the mortgage. So for example, if there are two borrowers in the home loan, you must have 50% or more ownership interest in the loan as a lawyer.
Need more information?
If you need further information, get in touch today to discuss your ability to avoid LMI and how we can help you obtain a competitive home loan.