Essential workers are those whose jobs are critical for maintaining public health, safety, and basic services, especially during crises. This includes healthcare professionals, emergency responders, and teachers. Their roles ensure the continuous operation of vital services, and they now have access to exclusive home loan benefits.
How Much Can I Borrow?
- Up to 90% of the property value, with LMI waived
- Up to 100% of the property value, with a guarantor
- You must be an eligible essential worker who is at least 18 years old and an Australian citizen or permanent resident.
- It has to be an owner-occupier loan for residential property.
- You must have a minimum of $5000 in genuine savings over a period of six months. Rent is accepted as genuine savings.
- The minimum loan amount is $250,000, and the maximum is $1,350,000 for metro locations and $1,000,000 for non-metro locations.
- In the case of a joint application, either applicant can be an essential worker.
- Discounted rates: There are special low rates for essential workers. Some packages have additional discounts for essential workers
- Waived fees: Some lenders waive fees for essential workers who are first-home buyers. Some examples are:
- 100% offset account.
- Redraw facility.
- Early repayments without penalty charges.
- Flexible repayment cycle: monthly, fortnightly or weekly repayments.
- Short application form from your broker
- Identification documents: driver’s licence, passport, medicare card
- Confirmation of employment with the employer
- Pay slips: Year-to-date pay slips covering three months or more will be required to show consistency for overtime and allowance concessions
- Bank account records/statements
- Accountant’s report
- Credit reports
- Property valuation reports
- Teachers
- Nurses
- Police
- Participants’ income must not be more than $90,000 for singles and $120,000 for couples
- You should not have any property in your name and the home should be your principal place of residence.
Which Lenders Waive LMI for Medico, Professionals, and Essential Workers?
Using the assessment tool, find out the number of lenders who offer waived LMI for essential workers. You can also get exact figures on how much you save on LMI.
90% LVR Loans With No LMI For Essential Workers
A lender in our panel offers a 90% loan-to-value ratio (LVR) with no LMI charged for essential workers looking to buy their first home. To further sweeten the deal, there is no minimum income requirement.
To qualify:
Essential Workers Eligible For Waived LMI
Lenders have offered to waive LMI on loans for up to 90% of the property value for the following essential workers:
This means first-home buyers in the job categories mentioned above can get up to a 90% Loan-to-value (LVR) home loan without paying LMI, which is usually only applicable on LVR below 80%.
How Much Do I Actually Save With Waived LMI?
| Property Value | Loan Amount | LVR | LMI Premium Saved* |
|---|---|---|---|
| $700,000 | $630,000 | 90% | $15,674 |
| $800,000 | $720,000 | 90% | $17,913 |
| $900,000 | $810,000 | 90% | $20,152 |
| $1 million | $900,000 | 90% | $22,392 |
Benefits Of Waived LMI
As seen from the table above, one can save tens of thousands of dollars by not having to pay LMI. The freed-up money can make homes that would otherwise be too expensive affordable.
Also, some essential workers will no longer have to fall into the deposit gap. They don’t have to wait as long to save up money for deposits, as only a 10% deposit will be required for the home loan. This will be crucial, especially now that rents are increasing and the cost of living is higher. The savings on LMI can be used to add to the deposit.
Why Do Banks Favour Essential Workers?
Essential workers are those whose jobs are considered key to society’s functioning. They are workers who put themselves in harm’s way to provide vital community services.
However, they often find it challenging to afford appropriate housing close to their place of work and are forced to look at locations farther away. It’s a difficult time to save for a property with cost-of-living pressures increasing and home loan repayments rising as interest rates go up. So, some lenders have come up with loan packages for essential workers, in appreciation of their resilience and because their employment income tends to be secure, even during a pandemic.
While they may not be high-earning citizens, essential workers earn moderately and have a regular flow of income, making them less likely to be default risks to banks.
100% Overtime Income accepted
Many lenders accept 100% of essential workers’ overtime income, due to the consistent nature of their jobs. However, some lenders shade it and have requirements; for example, they may insist that overtime be an expected component of their job.
Lenders usually require a borrower to have been employed in their current job for at least three months. Common minimum time requirements are six months or a year.
Lenders will look at the period of employment, employment contract, last two or three months’ payslips, PAYG payment summary and tax returns when reviewing a potential borrower’s application.
Do Lenders Accept My Allowance Income?
Many lenders accept 100% of income from employee allowances. Some conditions to be met are that they have to be working in the same job for some time, and lenders require the previous year’s earnings.
The work-related allowances must be permanent and a regular, ongoing part of the borrower’s income. Examples of acceptable forms are shift allowances, meal allowances and car allowances.
What Other Benefits Do I Get?
Each lender has packaged its essential worker or essential services product differently. Below are some benefits that a qualified essential worker can enjoy:
What Are The Documents Required?
What If My Partner Is Not An Essential Worker?
For a joint application, either one can be an essential worker. There are no minimum income requirements for either applicant. Additional documents may be required for special circumstances like defaults and low-doc loans.
NSW’s Shared Equity Scheme
To help key workers reach their goal of home ownership, the NSW Government has introduced a shared equity scheme.
With this scheme, the government wants to allow key workers to live closer to where they want to work and raise their family. With the growing number of women over 55 becoming homeless, the government also wants to help older singles secure a home.
Under this scheme, the government will contribute a portion of the cost for a property, in exchange for an equal portion of the equity – up to 40 per cent for a new property and up to 30 per cent for an existing property, and buyers will pay the rest. Buyers will have to put down a minimum deposit of 2% of the purchase price and will co-own the property with the government. For borrowers, using this scheme will mean that there will be a lower ongoing payment and lower upfront cost.
The shared equity scheme will be available for the following key essential workers if they are first-home buyers:
Besides essential workers, the scheme will also be available for single parents and singles who are above the age of 50.
Other requirements:
The maximum property value available in Sydney and the regional centres of NSW will be $950,000; in other areas, it will be $600,000.
The trial will be for two financial years, and only 3000 spots will be available each year. This scheme is to start in January 2023.