Home Loans for Police in Australia: No LMI Required

Entering the property market in Australia can be challenging, especially when house prices are rising, and you need a 20% deposit. However, for police officers, there’s good news - you can access specialised home loans where you only need 10% deposit, and avoid paying Lenders Mortgage Insurance (LMI).

In this article, we’ll explore how police officers can access LMI waiver home loans, find the lower interest rates, and what to consider when choosing the right loan. Whether you’re a first-home buyer, looking to refinance, or purchase an investment property, this guide will help you understand your options and maximise the perks of being a police officer.

How Much Can You Borrow as a Police Officer?

For police officers looking to apply for a home loan, there are several options, and the one that best suits you will depend on your personal circumstances. Take a look at the available choices here:

Borrow Up to 90% of the Property Value with No LMI

This option is particularly popular among police officers as it allows you to purchase a property with just a 10% deposit, without the need to pay Lenders Mortgage Insurance (LMI). Since LMI can cost tens of thousands of dollars, having it waived significantly reduces upfront costs.

• Deposit Required: 10% of the property’s value.
• Savings Requirement: Demonstrate $5,000 in savings over the last 6 months. Rent payments can count towards this savings requirement.
• Property Value Limits:
  • Metro locations: Up to $1.5 million.
  • Non-metro locations: Up to $1.11 million.
• Income Requirements: No minimum income requirement; lenders assess affordability based on your overall financial health.

This option is ideal for police officers who want to save on upfront costs while purchasing a property within a manageable price range.

Borrow Up to 95% of the Property Value

For those looking to enter the property market with a smaller deposit, borrowing up to 95% of the property value is an option. However, this comes with the added cost of LMI, which increases your total expenses.

• Deposit Required: 5% of the property’s value.
• Eligibility Requirements:
  • Stable employment and income.
  • Good credit history.
  • Minimal debts.
• Property Limitations: The property must be located in a metropolitan area.

While this option allows you to purchase a home sooner, the additional LMI cost should be factored into your overall budget.

Borrow Up to 110% of the Property Value

For police officers who have family members willing to act as guarantors, it’s possible to borrow the entire value of the property, plus additional costs like stamp duty and conveyancer fees.

• Deposit Required: None; you can borrow the full property value.
• Additional Costs Covered: Stamp duty, legal fees, and other purchasing expenses.
• LMI Exemption: No LMI is required, saving you significant upfront costs.
• Considerations:
  • Using a guarantor involves financial risk, particularly for the guarantor. If you default, their property may be at risk.
  • It’s essential to have a strong repayment plan in place.

This option is attractive for those who lack a deposit but have family support. However, the financial risks should be carefully weighed before proceeding.

Get Free Advice for Your Police Home Loan

Applying for a home loan and understanding which lenders offer LMI waivers can be confusing. Our suggestion is to speak to a mortgage broker who is experienced in police home loans. Eden Emerald Mortgages is our #1 choice - they specialise in home loans for police officers, and can answer all your questions, guide you through the home loan process, and negotiate the lowest interest rates.

Eden Emerald Mortgages' services are completely free of charge, and we have used Shaun ourselves, and can attest to his wealth of experience and knowledge.

Do Lenders Consider Overtime When Calculating Income?

Yes, lenders do consider overtime when calculating income for police officers, but the extent to which they include it varies. Many lenders only factor in 80% of overtime earnings, which can reduce your assessable income and limit your borrowing capacity. This approach is due to the perceived variability of overtime income.

However, there’s good news for police officers. Some lenders understand the consistent nature of overtime in law enforcement roles and are willing to consider 100% of overtime income when assessing your loan application. This can significantly boost your borrowing power, enabling you to secure a higher loan amount.

To qualify for full consideration of overtime income, you’ll typically need to provide:

• An employment letter confirming that you’ve regularly received overtime for the past 12–24 months.
• Recent payslips showing your overtime payments.
• Your income statement from the last financial year, verifying the stability of your income.

These documents help lenders assess the reliability of your overtime earnings, increasing the likelihood they’ll include the full amount in their calculations.

If you speak to EE Mortgages, they will help you negotiate favourable loan terms, including recognition of your overtime income. By presenting your case effectively to lenders, they help you maximise your full borrowing potential.

Do Lenders Consider Police Salary Packaging?

Salary packaging is a common benefit for Australian police officers, offering perks like novated leasing for vehicles and allowances for clothing or other expenses. While these tax-efficient benefits can improve your financial situation, most banks assess your income based on your gross salary, ignoring the tax advantages of salary packaging.

However, some lenders adopt a more flexible approach. They may recognise these salary packaging benefits as “tax-free” and add 100% of these benefits back to your assessable income. This can significantly increase your borrowing power, making it easier to qualify for a larger home loan.

To take advantage of this, you’ll typically need to provide:

• An employment letter confirming your salary packaging benefits as part of your overall compensation package.
• Supporting documentation, such as payslips, showing the breakdown of your benefits.

Working with a knowledgeable mortgage broker, such as Eden Emerald Mortgages, is key to identifying lenders that factor in salary packaging. They can help you present your financial profile effectively and maximise your borrowing capacity by ensuring these benefits are included in your income assessment.

Which Police Officers are Eligible for LMI Waiver?

A range of law enforcement officers can access police home loans. Here is a list of eligible officers, but if your profession is not listed here, you may still be able to access the benefits. Speak to an experienced mortgage broker who can guide you through your home loan application.

• State police officers
• Australian Federal Police officers
• Police canine unit officers
• Aviation police officers
• Detectives
• Forensics officers
• Highway patrol officers
• Marine police officers
• Mounted police officers
• Riot squad officers
• Tactical operations officers
• Transport officers
• Australian Border Force officers
• ASIO officers

What Is Lenders Mortgage Insurance (LMI)?

Lenders Mortgage Insurance (LMI) is a fee imposed by lenders when a homebuyer borrows more than 80% of the property's value. The purpose of LMI is to protect the lender in case the borrower defaults on their mortgage. For most homebuyers, this fee can range from a few thousand dollars to tens of thousands, depending on the loan size and deposit.

For many buyers, saving a 20% deposit to avoid LMI can be a significant challenge, especially in Australia's competitive housing market. However, certain professions, such as police officers, are often offered exemptions from LMI requirements, making it easier for them to get onto the property ladder with a smaller deposit.

LMI Waivers for Police Officers

One of the advantages that police officers have when applying for home loans is the ability to waive LMI. Some lenders in Australia offer LMI exemptions to eligible police officers with only 10% deposit. By waiving LMI, you can save tens of thousands of dollars when buying your home.

To qualify for a no-LMI home loan, police officers must meet specific criteria. Generally, these include:

• A stable position: Lenders typically require that the applicant is a police officer with permanent employment of at least 6-12 months.
• Maximum loan amount: $1.35 million for metro areas and $1 million for non-metro.
• Loan-to-value ratio (LVR): Lenders may waive LMI for police officers and allow them to borrow up to 90%.
• Strong credit history: A good credit score is essential to qualify for a no-LMI loan.

Which Lenders Offer No LMI Home Loans for Police Officers?

There are only a small number of lenders that offer LMI waivers for police officers, such as BankVic. It's worth consulting with a mortgage broker who specialises in police home loans. They can tell you which lenders offer the best deals, and find the right loan for your situation.

How Does LMI Waiver Benefit Police Officers?

Avoiding LMI can save police officers tens of thousands of dollars, allowing them to purchase a home sooner without having to save a full 20% deposit. In a market where home prices are steadily rising, this can be the difference between being able to afford a home this year, to being priced out of the market in the next few years. These are some of the key advantages of no-LMI home loans for police officers:

1. Lower upfront costs: One of the most significant advantages is the ability to avoid Lenders Mortgage Insurance (LMI). This can save police officers tens of thousands of dollars, easing the financial strain that often comes with purchasing a home.
2. Smaller deposit requirement: Police home loans allow officers to secure a loan with as little as 10% of the property value (and sometimes even less). This eliminates the pressure of saving for a 20% deposit, enabling officers to enter the property market sooner without compromising financial stability.
3. Access to competitive interest rates: Many lenders offer exclusive interest rate discounts and additional perks to police officers. These may include reduced fees, offset accounts, or flexible loan terms, helping officers save money over the life of the loan.
4. Faster path to homeownership: With the reduced need for a 20% deposit, police officers can achieve homeownership more quickly. This is especially valuable in a rising property market, where delays can mean higher purchase prices.

Additional Benefits for Police Officers

Beyond the significant advantage of Lenders Mortgage Insurance (LMI) waivers, police officers in Australia may also qualify for a variety of other perks when applying for a home loan. These benefits further reduce costs and provide added flexibility, making the home-buying process more convenient and affordable.

• Discounted fees: Many lenders recognise the stable and essential role of police officers and offer reduced or waived fees. This can include loan establishment fees and ongoing fees. These discounts help keep more money in your pocket, allowing you to focus on building your new home or covering other moving expenses.
• Flexible loan features: Police home loans often come with added flexibility to suit the demands of your lifestyle. These features may include offset accounts, redraw facilities and ability to make extra repayments without any penalties.
• Support for first-time buyers: Police officers purchasing their first home may also be eligible for government incentives such as the First Home Owner Grant (FHOG) and stamp duty concessions.

Final Thoughts

If you’re a police officer in Australia, buying a home is more attainable than ever thanks to home loans tailored specifically for law enforcement professionals. With benefits like LMI waivers, discounted fees, and flexible loan features, these loans can save you tens of thousands of dollars and reduce the financial hurdles of buying a home.

By taking advantage of these exclusive offers, police officers can enter the property market sooner and secure their dream home without being weighed down by unnecessary costs.

When exploring your options, it’s essential to compare offers from different lenders and work with a mortgage broker who understands the unique needs of police officers. Eden Emerald Mortgages has been voted the #1 mortgage broker by the Canberra Times and specialises in helping police officers find the best home loans. Contact them today to see how they can help you secure your home loan with no LMI.