CBA has launched a new LMI waiver policy, effective from July 30. (Source: AAP/Getty)
Commonwealth Bank is waiving the cost of lenders mortgage insurance (LMI) for more Australian workers taking out home loans. Banks normally charge LMI if you don’t have a 20 per cent deposit, and it currently costs the average buyer around $23,000.
The major bank already offers LMI waivers to a range of higher-earning professions, including those in the medical, legal, accounting and finance sectors. For example, some medical professionals like doctors and dentists can borrow up to 95 per cent loan-to-value ratio without paying LMI, while legal professionals like solicitors and barristers can borrow up to 90 per cent LVR without paying the extra cost.
From July 30, the major bank introduced new LMI waivers for various professionals, including pharmacists, medical professionals, banking professionals, and judges and magistrates.
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Pharmacists now only need to earn $100,000 per annum, down from $150,000, to be eligible for the LMI waiver. Medical professionals with limited registration, such as interns or doctors in supervised practice, will also now be eligible.
Judges and magistrates can qualify for waivers using one of several forms of evidence, such as a payslip, tax return or appointment letter.
For banking professionals, the major bank has removed the requirement to have salary credits to a CBA account prior to settlement.
CBA executive general manager home buying Marcos Meneguzzi told Yahoo Finance the expanded waiver policy would make it easier for more Aussies to step into home ownership sooner.
“At Commonwealth Bank, we are constantly reviewing and monitoring our home loan policies and processes to see how we can best meet our customers’ home buying needs while maintaining our prudent lending standards,” he said.
CBA trialled an extension to their LMI waiver policy to include frontline workers like nurses, police, paramedics and firefighters earlier this year.
“All loans are assessed on a case-by-case basis and adhere to APRA’s prudential requirements through robust credit assessments, portfolio monitoring and responsible lending obligations,” a CBA spokesperson told Yahoo Finance at the time.
“We encourage customers to speak with their lender or broker to discuss their personal home loan needs and understand what options are available to them.”
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Various banks, including CBA, NAB, Westpac and ANZ, offer LMI waivers for certain professionals, generally those in medicine, law or financial services. Waivers are subject to eligibility criteria depending on the profession, loan type and LVR.
Earlier this year, NAB announced it would be expanding its LMI waivers to include more professions, including accountants, lawyers and more medical professionals.
Last year, ANZ controversially announced it would allow people living in some of the country’s richest areas to borrow up to 95 per cent of a property’s value without paying LMI.
ANZ included 145 postcodes on the waiver list, including Point Piper, Toorak, Hamilton and Cottesloe.
Under the policy, borrowers are required to take out a home loan of $2 million or more and meet income and other requirements to avoid LMI.
The federal government has announced plans to allow all Australian first home buyers to purchase with a 5 per cent deposit, avoiding LMI, in an expansion of the existing guarantee scheme.
The government would also raise price caps for properties eligible under the scheme, get rid of income caps and the limit on the number of places available.
Sydney residents would be able to get in with a new $1.5 million cap, Melbourne $950,000, Brisbane and Canberra $1 million, Adelaide $900,000, Perth $850,000, Hobart $700,000 and Darwin $600,000.
This change is set to come into effect from January 2026.
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