Buying a home can be an expensive process! You need to consider much more than just the property price, taking into account extra fees and debts you may incur along the way.
When possible, it’s best to avoid a requirement for private mortgage insurance. By taking the right preventative steps, you can ensure you don’t exceed your budget or pay an unnecessary excess towards the purchase of your home.
Wondering how best to avoiding paying for private mortgage insurance, or PMI? Consider these simple tips!
Save a larger deposit
Generally speaking, private mortgage insurance is a requirement when you plan to borrow over 80 percent of the total property value. Saving a larger deposit can eliminate the need to insure! When you have a deposit of more than 20 percent, you’ll start your home ownership journey with a greater equity share. You’ll also show your lender than you can be trusted to pay back your loan with a lower risk of default. This may mean that PMI is waived!
Shop around for a loan
Your next option is to shop around for the right loan! Every lender is different, with some lenders offering special programs or packages that allow you to avoid private mortgage insurance, even with a low deposit. Working with a skilled mortgage broker, shopping around can help you better understand the market and uncover the best loan option with the lowest associated fees.
Look for grants and assistance
Depending on where you live, you may be eligible for homebuyer assistance grants or schemes, often administered by the government. Looking into this can give you more money to work with while purchasing property. Some schemes are designed specifically to eliminate fees like stamp duty or PMI, which might otherwise stand in the way of your entry to the property market.
Pay a higher interest rate
How would you prefer to pay? Some lenders often special deals for buyers with a low deposit amount, allowing you to avoid paying for private mortgage insurance by instead committing to a higher interest rate. In these cases, it’s best to evaluate your options carefully and seek professional guidance if you can. You won’t have to pay for PMI, but you will be expected to make higher monthly repayments towards your loan.
Purchase a cheaper property
Sometimes, the best course of action is simply to re-evaluate your property plan. Can you really afford to buy a home right at the top of your budget? Buy purchasing a cheaper property, you can avoid stretching your finances beyond their limits and avoid PMI requirements too. This can help you plan for greater financial security going forward and could even support future home ownership goals.
Buying a property can be complicated! The good news is that you don’t have to navigate the complexities of PMI on your own. We’re here to help! Talk to the expert team at Our Top 10 to find the best mortgage broker Sydney has to offer.