Home loans for lawyers & legal professionals….what you need to know
Did you know as a lawyer or someone in the legal profession you may be able to access exclusive home loan benefits? As a legal legal professional, you are considered a low-risk borrower with a higher than average income and therefore, less likely to default on your loan. For these reasons, some lenders offer specialised home loans for lawyers and some legal professionals. Find out everything you need to know about home loans for lawyers and legal professionals, from the potential benefits to who is eligible.
The benefits of home loans for people in the legal profession
Interest rate discounts
Many lenders offer special concessions for legal professionals, including lower interest rates. These will vary depending on your income, the amount you are borrowing and your industry association.
Flexible lending criteria
As a lawyer or legal professional, lenders often offer flexible lending criteria and tailored loan packages. Because lawyers and legal professionals are considered lower risk in some cases, the lender will require only 1 years tax return.
Loans with no Lenders Mortgage Insurance (LMI)
Avoid LMI when borrowing up to 95% of the value of the property.
Option to purchase in your own name or via a company
Enjoy the added benefit of being able to purchase your home or investment property in either your name or a chosen company.
What is LMI and how much can I potentially save?
Lenders Mortgage Insurance, which is often referred to as LMI, is a one-off premium that is added to your home loan to protect the lender should you default on your loan. LMI applies only if you intend to borrow over 80% of the property value. The amount of LMI is calculated based on how much you borrow and the size of your deposit. The higher your deposit, the lower your LMI will be.
This can add a substantial cost to your loan, depending on your deposit. For example, on a $2,000,000 property, a person borrowing 90% of the cost would have to pay over $50,000 in lenders mortgage insurance.
As you can see, avoiding Lenders Mortgage Insurance with a home loan for certain legal professionals can be a huge and worthwhile saving. Not only will it reduce your overall mortgage costs but it will help to reduce your monthly or fortnightly repayment, help you build equity faster and free up disposable income to put towards expenses or investments.
What are the eligibility requirements for home loans for lawyers & legal professionals?
Only select lenders offer specailised home loans for lawyers and legal professionals. Whilst there are minimum annual income limits, maximum loan amounts and requirements for self employed people, the requirements and types of legal professionals they offer these loans to varies considerably between lenders. It’s best to check with your broker who can assist navigating the process, particularly if you are a partner or own your own legal practice.
You must also be an Australian Citizen or permanent resident and be able to provide a current and up to date practicing certificate in your area of jurisdiction.
The property you are purchasing is also required to be for investment purposes or owner occupied.
Do I need to be a member of an association to qualify?
The rules will differ depending on your chosen lender. In some cases, you will need to be a member of an association to be eligible, whereas, in other instances, documentation to prove you are practicing is sufficient. Some of the recognised 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
What is required to prove your membership?
You may need to provide evidence of your membership in the form of one of the following:
- Written confirmation from the membership association
- Current valid membership card
- Receipt for payment of annual membership
- Practicing certificate
What types of roles count as legal professionals?
To access the benefits of home loans for legal professionals, you generally need to be working as a lawyer, solicitor, barrister, partner, judge, magistrate or Australian Government Solicitor.
Purchasing a property with your spouse
If you plan on purchasing a property with your spouse or one or more borrowers, you will need to hold 50% ownership or more in the loan.
FAQs about home loans for lawyers & legal professionals
What if I want to put the property in my husband or wife’s name?
It is not uncommon for legal professionals to choose to put the ownership of their assets in the name of their husband or wife as a safeguard in case they are ever sued, or their business is liquidated.
Some lenders will still consider loan approval if your property is owned by your spouse, but the loan is in both names. It is best to check with your mortgage broker or chosen lender as to their requirements.
What if I want to borrow less than 80%?
If you are looking to borrow less than 80%, you will likely be looked upon favourably by lenders. Given your strong financial position, your mortgage broker should be able to negotiate discounted rates.
Is Lenders Mortgage Insurance waived when refinancing?
Generally, you can refinance up to 90% of your property’s value without having to pay Lenders Mortgage Insurance.
What if I am a partner in a legal firm? Do I qualify for reduced income verification?
If you are a partners in any of the following legal firms and you are looking to borrow less than 80%, you may quality for reduced income verification. You would need to provide an employment letter demonstrating your income. Please note that this is only available if you are a partner, not if you are an employee
- Allens Arthur Robinson
- Corrs Chambers Westgarth
- Clayton Utz
- Freehills
- Minter Ellison
- Gadens
- Gilbert and Tobin
- Herbert Smith Freehills
- King and Wood Mallesons
- Minter Ellison
- Norton Rose Fullbright
Can I access a home loan for lawyers & legal professionals to purchase commercial property?
If you are looking to purchase a commercial property, it is advisable to speak with a qualified and reputable mortgage broker to find out what benefits you can access.
What if my legal profession title isn’t on the list?
If your job title doesn’t appear on the eligible list of professions, you might still be able to access the benefits associated with a home loan for legal professionals if you can prove that the work you do is the same as any one of the listed professions. For example, as a Special Council, Associate or Senior Associate, you will still be eligible.
What other professions can have LMI waived?
Certain lenders may waive LMI for doctors, accountants and engineers.
I meet the criteria. How to obtain a home loan as a lawyer or legal professional?
When considering a home loan as a lawyer or legal professional, it is advisable to engage with a reputable mortgage broker to ensure you are taking advantage of all the available benefits applicable to your situation.
Loan applications can be complex depending on your circumstances and income structure. A mortgage broker will understand the fine print and with direct lender relationships, have access to various loan options to be able to secure the best option for your needs.
At Townsend Wealth, we have helped many legal professionals to secure finance for their dream homes or investment properties. To find out more today, contact one of our experienced team members.
