Real Case Studies

Dr David’s Home Loan Case Study

95%LVR waived LMI for doctors

Profile: David is a second-year medical resident doctor based in South West Sydney and earns $140,000 per annum, including overtime.

Objective: He wants to buy his first home, an apartment, for $700,000 so he can be closer to work & stop paying $500 per week in rent.

Problem: While speaking to family, David discovers to his dismay, that his $50,000 in savings is not enough. He will either need to save another $90,000 to make up a 20% deposit, dole out several thousands for LMI or ask his parents to act as guarantors for his home loan to be approved.

Solution: After discussing his situation with a colleague, David is referred to his colleague’s mortgage broker, Mortgage Pros, who specialise in home loans for doctors. There he discovers that a few lenders offer home loans for doctors!

He can borrow over 90 per cent of the property value without paying lenders mortgage insurance and even receives a larger interest rate discount. After crunching the numbers, David is told if he borrows $665,000, 95 per cent of the purchase price, he will save about $25,000 in LMI costs!

Like David, you can save thousands on your home loan with an LMI waiver. You can always contact one of our mortgage brokers specialising in home loans for doctors by calling us on 1300 816 770 or enquiring online.

Dr Jen’s Property Portfolio Case Study

Savings thousands by refinancing 

Profile: Jen is a psychiatrist based in the inner west of Sydney. She works for herself and earns $400,000 per year. She has been very successful with property and amassed a portfolio of 7 properties across Australia, roughly half paid off.

Objective: With interest rates rising, Jen has seen her rates go from 2.24% to 5.57% in about a year. She hopes to ensure she is on the lowest rate possible and not paying more than she needs to.

Problem: Jen calls her existing bank and requests them to give her a better interest rate on her home loan. She wants the rates which are advertised on their website. They regret to inform her that they cannot assist as the rates on their website are limited to new bank customers & she is already on the best they can offer.

Solution: After discussing her situation with a work colleague, Jen is referred to her colleague’s mortgage broker, Mortgage Pros, who specialise in home loans for doctors. They thoroughly analyse her situation & the market to find her the best deal. Jen refinanced all her loans and was able to achieve the following:

• Lower the interest rates on her loans by 0.50%. Saving her approx. $21,000 per year in interest.

• Take advantage of cashback the bank was offering. She was able to obtain a $4,000 cashback per property. Hence as she had 7 properties the bank paid her $28,000 to move her business over.

• Re-extend her interest-only periods back to 5 years on her investment loans

Dr Tom’s Home Loan Case Study

How to increase your borrowing capacity

Profile: Tom is a psychiatry registrar based in South Sydney and earns $180,000 per annum including overtime. He is married and has two children. His wife works in graphic design & earns $80,000 per annum. They own a two-bedroom apartment which they live in that is about half paid off.

Objective: Tom & his wife need more space for the kids. They are looking to move into a house with a backyard and are seeking to spend $1,200,000.

Problem: Tom speaks to his existing bank about getting preapproval, and they tell him, to his shock their maximum borrowing capacity for new lending is $800,000. Tom & his wife are not able to save or ask the family for $400,000. In addition, with a budget of $800,000 they are limited to just buying another apartment.

Solution: After researching online, Tom stumbles upon the Mortgage Pros website and sees they specialise in home loans for doctors. He called through and, in under a week, was preapproved to purchase a property for 1.2 mil and only needed to make a few simple changes.

• Cancelling all credit cards. Combined, Tom & his wife had three credit cards with a total limit of $20,000. Even though credit cards were seldom used, due to regulations, banks must factor them in as if they were at their limits. This reduced their total borrowing power by approx—$140,000.

• Selecting the right bank that will maximise his borrowing capacity. By reverse engineering the methods each of the banks work out their borrowing capacity, we can identify crucial differences in their methods of calculation. By evaluating these differences, we determine which ones may apply to Tom’s situation and then simulate the impact. For his case, we identified the following had the biggest impact on his borrowing capacity:

  • Using 100% of Tom’s overtime for the most recent three-month period. Most banks only use 80% of overtime; however, even amongst the ones that use 100%, the calculation method varies differently, causing drastic differences in results. For Tom, due to recent pay rises, his overtime income was highest in the last three months which we were able to capitalise on.

  • Using his salary sacrifice as an untaxed income. Like most PAYG doctors working for a hospital, a portion of Tom’s income went towards salary sacrifice, which would be reimbursed untaxed. Different banks have varying policies on salary sacrifice, with some deducting it from your income to other adding it back as untaxed.

  • Using the smallest assessment rate buffer on Tom’s existing home loan fixed at 2.19%.