LMI waivers for police
who offers them, and the fine print

When you borrow more than about 80% of a property's value, the lender's risk rises: if you default and the home sells for less than the debt, the lender loses money. LMI covers that loss. The premium is a one-off cost, usually added to the loan, so you pay interest on it for as long as the loan runs.

Because it protects the lender, LMI does nothing for you if you lose your job or fall ill. That's a different product, such as income protection insurance. You're still responsible for the debt.

A waiver means the lender takes on that extra risk itself, or absorbs the premium, for groups it sees as low risk. Lenders treat police as stable, long-tenure employees, which is why some offer waivers to police, nurses, paramedics and similar workers.

Two things jump out. The premium roughly doubles from 85% to 90% LVR, and nearly doubles again to 95%. And it scales with the property: on these estimates a $1,000,000 home at 90% LVR attracts about $22,140.

If the premium is added to the loan, interest makes it cost more again. On our worked example below, a $16,605 premium added to a 30-year loan at 6% costs about $19,235 in extra interest on top of the premium itself (calculated by us). Ask the lender for the full premium, including any government charges, in writing.

A waiver saves the premium and the interest you'd have paid on it, but only if the rest of the loan is competitive.

And the lenders police often ask about that didn't advertise a police LMI waiver when we checked:

Brokers sometimes describe other "no LMI" deals through panel lenders. We only list waivers we could read on the lender's own site. Our guide to police banks and credit unions covers what the mutuals do offer instead.

P&N Bank began as a credit union for WA police in 1969. Its Essential Services Offer covers state or federal police and police staff, including auxiliary officers and any WA Police employee, as well as nurses, doctors, firefighters, paramedics, prison officers and teachers employed in WA.

Two other details matter. P&N says it takes 100% of your overtime into consideration when assessing a loan. And its $1,500 cashback isn't available when LMI is waived; the cashback needs an LVR of 80% or less.

People First Bank isn't a police-founded bank: it's a trading name of Heritage and People's Choice Ltd. Its Essential Services Package is open to sworn state or federal police officers, registered nurses and fully qualified paramedics, nationwide.

A broker, Hunter Galloway, reports the income floors as $80,000 a year single, or $150,000 combined with at least $75,000 from the eligible worker, and says casual work, probation, construction and vacant land are excluded. We haven't seen those conditions on the bank's own pages, so confirm them with People First Bank.

Note the rate. Paying the above-80% LVR rate on the whole loan can, over several years, eat into the LMI saving. Compare the total cost with a loan that charges LMI at a lower rate.

BankVic was established in 1974 to serve Victoria Police and was called the Police Credit Co-operative until 2013. Membership is open to any employee of an Australian state, territory or federal police force, among others.

The waiver's own terms sit behind a "Terms and conditions apply" link that we couldn't read as text. Until you see them, treat the waiver as possible rather than certain, and get BankVic to confirm in writing that your loan will have no LMI before you sign.

BankVic, P&N Bank, People First Bank, Police Bank, Police Credit Union and QBank all appear on the scheme's participating lender list, so you may be able to use the scheme with a police-friendly lender. Help to Buy, the shared-equity scheme, also removes the need for LMI, but has income limits that many experienced officers will exceed. See our guide to police home loans for the details, and your state's first home buyer guide for stamp duty.

An officer buys a $750,000 home in Perth, inside the WA capital-city cap. Repayments are at an illustrative 6% over 30 years, principal and interest. Stamp duty and other costs come on top of every deposit shown.

The trade-off is clear. The waiver saves the premium but needs twice the deposit of the scheme. The scheme gets you in sooner but gives you a bigger loan. If you've owned property before, the scheme isn't open to you, and the waiver may be the main way to avoid LMI with a 10% deposit.

1. 1

   Confirm your role fits

   Role

   Sworn officer, police staff or recruit? P&N covers police staff; People First covers sworn officers only.

2. 2

   Check your employment status

   Status

   Probation, casual or fixed-term work can exclude you. Have your confirmation of appointment ready if you've finished probation.

3. 3

   Check the location

   Postcode

   P&N's waiver is for listed WA areas only. Ask BankVic whether your postcode qualifies.

4. 4

   Check the loan shape

   Loan

   Owner-occupier or investment, principal and interest, minimum and maximum loan amounts.

5. 5

   Check the channel

   Route

   Apply direct if the waiver is direct-only. Ask any broker whether they can access the waiver.

6. 6

   Get it in writing

   Proof

   Before you sign a contract of sale, get the lender to confirm in your approval that LMI is waived.

A broker can compare lenders' income policies and find one that counts your overtime, which may matter more than LMI if borrowing power is your constraint. But P&N Bank's waiver is lost through a broker, and other waivers may be too. Ask, before you commit, which police waivers a broker can actually get you.

Your super can help too: the First Home Super Saver Scheme lets you save part of a deposit inside super. Police schemes treat contributions differently, so read our guide to police superannuation before you start.