"LMI provides investors with greater flexibility in their investment strategies"
This article was produced in partnership with Helia
In today’s competitive market, finding avenues for growth is key for business and investment property makes perfect sense for brokers when thinking about how to expand and grow.
The synergy between investment property and Lenders Mortgage Insurance (LMI) presents a significant opportunity. Mortgage brokers can position themselves as experts in property finance and offer tailored guidance including leveraging LMI for investment property to attract a new customer segment keen to capitalise on the benefits of property investment.
Greg McAweeney, Chief Commercial Officer at Helia commented: “Investment in property and LMI go hand in hand, offering investors the key to unlocking opportunity in the property market with confidence. LMI lowers the barrier to entry, enabling them to maximise their potential returns and build wealth through strategic property investment”.
Investment property holds immense appeal for individuals seeking to build long-wealth and diversify their investment portfolios. Unlike other asset classes, real estate offers tangible benefits such as rental income, tax advantages and the potential for capital appreciation.
Why LMI makes sense for property investment?
- Lower deposit requirement enables faster entry into the investment property market - for investors, particularly those with a limited deposit, LMI opens doors to property ownership by allowing them to secure a loan with a smaller deposit (typically 5% of the purchase price not including stamp duty and additional costs). This means that investors can leverage their capital more, potentially accelerating their entry into the property market and diversifying their investment portfolio.
- Access to higher value properties – LMI enables investors to capitalise on opportunities in high-demand higher value property markets that have strong growth potential. Instead of waiting years to save a substantial deposit, investors can act when the right investment presents itself, thereby maximising their chances of generating good returns.
- Portfolio diversification – by investing in property, investors can diversify their investment portfolio beyond traditional asset classes such as stocks and bonds.
- Tax benefits – deductions for mortgage interest, property expenses, lenders mortgage insurance cost and depreciation. By leveraging LMI to invest in property, investors may be able to access potential deductions to reduce taxable income.
McAweeney acknowledged “LMI provides investors with greater flexibility in their investment strategies. Whether they aim to purchase a single property for long-term capital appreciation or build a portfolio of properties for rental income, LMI makes it possible for investors to tailor their approach to suit their financial goals and risk appetite”.
Helia helping investors to get into the property market
Helia introduced Family Assistance to support entry into the property market and can be used for owner occupied or investment loans. It allows family to support the loan purchase by paying the cost of LMI upfront at time of loan settlement and receive a 15% reduction off the cost of the LMI.
To help more mortgage brokers have discussions with investors about LMI, Helia has developed a number of education resources including the Deposit Comparison Estimator, which allows brokers and investors to compare the overall costs of using LMI, particularly comparing using LMI versus waiting to save the full 20% deposit. The estimator also provides a snapshot of future value and projects assumptions to 10, 20, and 30 years which assists making decisions with confidence.
Additionally, Helia has been developed a range of case studies as educational resources to showcase examples and provide insights when engaging with clients. Helia has just released their latest “Investor case study” featuring Christina and Mark who leveraged LMI for investment property.
Disclaimer:
The information contained on this article is general information. It does not constitute legal, credit or financial advice, and is not tailored to a borrower’s specific circumstances. Borrowers should consider their own personal circumstances and seek professional advice before making any decisions.
Helia Insurance Pty Limited’s (‘Helia’) credit activities are limited to credit activities engaged by it as an assignee in relation to providing lender’s mortgage insurance (LMI) products or as a credit provider under the doctrine of subrogation in relation to providing LMI products. LMI is insurance that protects credit providers, not home buyers, and cannot be provided directly to home buyers. The information provided in this article does not refer to credit contract with any particular provider.
Helia is Australia’s leading LMI provider. Our purpose is to work with our customers to help home buyers achieve their dream of home ownership sooner and so be able to accelerate their financial wellbeing through home ownership.
In 2023, we helped over 42,000 home buyers into homes sooner, as well as assisting with over 9,000 hardship requests to enable home buyers to stay in their homes when they faced difficulties.
