DOCTORS SAVE THOUSANDS IN LOAN FEESTom Uhlich
DOCTORS are being treated to discounted home loans, saving them tens of thousands of dollars, because they are a safer bet for banks than the average Aussie.
Medicos and other highly paid professionals including lawyers and accountant are gifted massive mortgage savings through home loan deals almost impossible for others to get.
Experts say banks have a list of preferred borrowers and doctors are right at the top.
News Corporation Australia has learned medicos with deposits of just five per cent and no history of “genuine savings” are avoiding costly Lenders Mortgage Insurance (LMI) – cover if the borrower fails to repay.
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Remove the “Dr” honorific, and the LMI bill on a $500,000 loan soars to as much as $17,500. Because most people with small deposits don’t have that kind of money, it is usually added to the loan. This inflates the cost of LMI by another $24,400 to a total of nearly $42,000 over a 30-year term. And that’s only if the borrower can show their five per cent deposit is genuine savings such as term deposits or shares and not a gift from family.
LMI and the savings test are being waived for medicos because they are considered a safer bet as borrowers: doctors’ incomes will rise faster, there is high-demand for their services and years of study indicate they see things through.
“These loans very rarely go bad, the only time being (as a result of) divorce,” said Hank Hong of Sydney’s Home Loan Experts, who arranges doctors-only deals.
Another reason for their favoured treatment is they are a better “calibre” of customer, said John Paynter of JP Loans, who also sets up mortgages for medicos.
“I’ve never had any misleading or lying,” by a doctor or specialist, Mr Paynter said.
“It happens pretty regularly outside of the medical space,” Mr Paynter said, such as understating credit-card debts or asking him to “bodgy-up” an application so more can be borrowed.
The sweetheart deal market is expanding rapidly. ANZ recently re-entered, joining CBA and Westpac as providers. The large building society Wide Bay Australia set up a medico loan book last year. Macquarie is said to be about to join in and St George Bank recently widened the range of qualifying professions to include engineers and lawyers.
Home Loan Experts’ Mr Hong said it was possible for other people to get loans on these terms and Wide Bay’s head of medico finance Peter Clements said: “We will look at things on a case-by-case basis.”
Finder.com.au money expert Michelle Hutchison, who brought these special loans to light, said other borrowers could “ask their lender to match” the terms.
Alternatively, she advised finding a better deal, spending more time saving a bigger deposit or looking at a lower-priced property.
GET THE DR TREATMENT
- You’ll need annual income of $150,000+
- It helps if you are a vet, psychologist, dentist, lawyer, accountant, financial planner or engineer
- Join your professional association. Most lenders will want evidence of membership
- Go through a consultant. It’s harder to get these deals direct from a lender
- And ring lots of consultants. Only about 5 per cent have access to these special deals.