When applying for home loans, school teachers and educators can get waivers and other discounts from lenders that other professionals don’t. This makes buying a house more affordable. It also means you can pay off your home loan earlier and on more favourable terms.
Here’s what teachers and educators need to know when applying for a home loan.
LMI waivers and discounts
Usually, home loan applicants have to take LMI when their deposit is less than 20% of loan value. But teachers and educators are eligible for a whole host of discounts and a high threshold for LMI waivers.
- Borrow up to 85% LVR without having to take LMI on your property (for properties occupied by owners). You may borrow up to 99% of LVR, including LMI, but only if you are a first home buyer currently teaching or in education. This waiver alone can save you thousands of dollars.
- Ability to refinance up to 85% of LVR without LMI on owner-occupied properties.
- Teachers buying their first home can qualify for a loan with just 3% of value in genuine savings and 6 months of rental history. Alternatively, a 5% deposit using genuine savings and 3 months of your bank statements will work too.
- Application fees may be waived.
- Access to professional home loan packages.
- Big discounts on interest rates for large value loans with a low LVR.
- Eligible for fixed loans with additional repayment time.
- Fixed loans may come with a 100% offset.
To be eligible for teacher and educator LMI waivers and discounts when applying for a home loan, you must work as one the following.
- High school teacher
- Preschool / kindergarten school teacher
- Primary school teacher
- Specialist teacher
- Student studying teaching
- TAFE lecturer
- Teacher at a government or private school
- Trainer working in the education space in some professional capacity
- University lecturer or professor
Lenders know that most new teachers usually start out on a casual basis and can consider applications from them so long as certain conditions are met. Typically these are as follows.
- At least 3 to 6 months experience in the role.
- Payslips for at least 3 months in the current year.
Some teachers prefer to work on a casual basis during their career. Lenders typically annualise your income with a year to date calculator using only 40 weeks per year. This may put you at a disadvantage.
Besides your normal base salary, lenders may use other types of income in calculating your income for teacher home loan purposes. These include:
- Higher Duties Allowance (HDA) that teachers receive when they are promoted to perform duties of a higher role in addition to performing their regular activities. The full extent (100%) of the HDA will be taken as income if you can give a letter from your employer confirming that the HDA is ongoing and show that it appears on at least 2 recent payslips.
- Overtime is usually acceptable if it is ongoing and appears on your last 2 months' payslips. Expect lenders to use only 80% of overtime income in their calculation.
Are professional packages right for you?
Professional packages are designed for people who want to borrow more than $250,000 and are interested in getting more than just a home loan from the same bank. A typical professional package might consist of a transaction account, credit card, and a home loan.
Banks offering professional packages often charge a single combined annual fee — ranging from $300 to $750 depending on the services included — which can be compared to the annual fees charged if you had each product separately.
Teachers and educators with overseas qualifications
Teachers and educators with overseas qualifications may find it more difficult — but not impossible — to access the LMI waivers and discounts you are eligible for. A mortgage broker can help with your application.
Consider working with a mortgage broker
Mortgage brokers have access to a variety of loan products from multiple lenders and can help you find deals with advantageous terms that are best suited to you.