When you’re building your investment portfolio, every dollar plays a part in your long-term success. One expense that often catches investors by surprise is Lenders Mortgage Insurance (LMI)—a fee that protects the lender if you’re borrowing more than 80% of a property’s value. But here’s the good news: with the right strategy, you may not need to pay it at all. An LMI waiver for investment properties can give you a head start, helping you maximise returns from day one.
What is an LMI Waiver?
An LMI waiver means the lender agrees to remove the LMI premium requirement—even if you’re borrowing above the typical 80% loan-to-value ratio (LVR). Depending on the lender’s policy, professionals like doctors, accountants, engineers, and others in key industries could be eligible for LMI waivers at 85%, 90%, or even 95% LVR.
For investment properties, qualifying for an LMI waived loan can be more challenging than for a home you intend to live in. But with the right guidance, it’s possible to tap into this opportunity and save tens of thousands of dollars upfront.
Why LMI Waivers Matter for Investment Properties
As an investor, you have unique priorities—like managing cash flow and maximising tax benefits. While LMI premiums can be claimed as a tax deduction over five years (or the life of the loan if shorter), paying it upfront still ties up significant capital. An LMI waiver helps you keep that cash in your pocket, which could be better spent on:
- Renovating to increase rental income.
- Covering stamp duty and legal fees.
- Building a financial buffer for unexpected property costs.
- Strengthening your borrowing power for future investments.
In short, avoiding LMI isn’t just about saving on a fee—it’s about keeping your money working towards your wealth-building goals.
How LMI Waivers Work for Investors: Eligibility Criteria
Lenders are naturally cautious with high-LVR investment loans. However, with tailored advice, there are several pathways investors can explore to secure an LMI waiver:
- Profession-Based Exemptions: Some lenders offer LMI waivers up to 90% LVR for investors in select professional fields.
- High Income & Asset Position: Investors with strong income streams and a solid asset base may be able to negotiate an LMI waiver, especially if they have a diversified property portfolio.
- Lender Promotions: Occasionally, lenders roll out special offers waiving LMI on specific investment loan products to attract quality borrowers.
- Family Guarantees: In some cases, a guarantor (such as a family member) can use their property’s equity to help you bypass LMI altogether.
Tax Deductibility of LMI for Investment Properties
Even if an LMI waiver isn’t available, remember that LMI is still a tax-deductible borrowing expense on investment loans. According to ATO guidelines:
- You can claim it over five years or the loan’s life, whichever is shorter.
- The deduction applies only if the property is rented out or genuinely available for rent.
For instance, if you pay $12,000 in LMI, you can claim $2,400 each year over five years, as long as the property is generating income.
Interest Deductibility: Maximising Tax Efficiency
Beyond LMI, you can also claim tax deductions on interest for investment loans, provided the funds are used for income-producing purposes. This includes:
- Loans for purchasing investment properties.
- Loans used for renovations or repairs.
- Loans for purchasing depreciating assets related to the rental property.
It’s important to note that any portion of the loan used for personal expenses—like buying a car or funding a holiday—cannot be claimed.
Example: Apportioning Loan Interest
Imagine you borrow $500,000, with $450,000 allocated to an investment property and $50,000 used for a car. If you pay $25,000 in total interest for the year, only:
$25,000 × ($450,000 ÷ $500,000) = $22,500is claimable as a tax deduction for your investment property.
Strategic Tip: Combining LMI Waiver with Tax Deductions
If you’re eligible for an LMI waiver, the upfront savings can significantly ease your cash flow—allowing you to deploy that capital into areas that grow your wealth faster. At the same time, the ongoing interest deductions will continue to reduce your taxable income, giving you a powerful combination of benefits.
For those who still need to pay LMI, smart loan structuring and maximising deductible expenses can soften its impact on your finances.
Final Thoughts: Should You Pursue an LMI Waiver for Your Investment Property?
LMI waivers aren’t just for first home buyers. For investors, they can be a strategic advantage—if navigated correctly. But the fine print varies widely between lenders, and understanding which path is right for you requires expert insight.
At Ausfirst Lending Group, we take the stress out of the process. If you’re considering an investment property with a high LVR, reach out to us for a tailored consultation. We’ll guide you through your eligibility, negotiate with lenders on your behalf, and structure your loan to maximise every available benefit—so you can focus on growing your property portfolio with confidence.
FAQ: LMI Waivers & Tax Benefits for Investment Properties in Australia
LMI Refunds, Tax & Insurance
Yes, you can. Lenders Mortgage Insurance (LMI) is considered a borrowing expense for investment properties. The Australian Taxation Office (ATO) allows you to claim it over five years or the loan term—whichever is shorter—as long as the property is rented out or available for rent.
LMI waivers are not widely advertised but are available through select lenders for borrowers in high-demand professions like doctors, accountants, lawyers, and engineers. Banks such as ANZ, Westpac, NAB, Macquarie, and some non-major lenders offer LMI waiver programs for eligible applicants, often up to 90-95% LVR. Occasionally, lenders release special promotions that temporarily broaden eligibility.
Yes, professionals in the following fields commonly qualify for LMI waivers:
- Medical professionals (doctors, specialists, dentists)
- Accountants and auditors (CPA, CA, IPA members)
- Lawyers and solicitors
- Engineers (with professional memberships)
Each lender has specific criteria, and proof of qualifications or industry memberships is usually required.
Yes, if you’re in an eligible profession and meet the lender’s requirements, you could secure an LMI waiver with just a 10% deposit (90% LVR). For most borrowers outside these groups, a 20% deposit is typically needed to avoid LMI.
Aside from saving a 20% deposit, alternatives to paying LMI include:
- Qualifying for an LMI waiver program.
- Using a family guarantee, where a family member’s property supports your loan.
- Keeping an eye out for limited-time lender promotions offering LMI waivers.
Sometimes, paying LMI is a smart move if it means getting into the market sooner or buying a high-potential property. Since LMI is tax-deductible for investment properties, the overall cost can be softened over time. However, if you’re eligible for an LMI waiver or can structure your finances effectively, avoiding it can lead to significant upfront savings.
Generally, you’ll need a 20% deposit to avoid LMI. However, eligible professionals may borrow up to 90-95% LVR without LMI, depending on the lender’s policies and your financial situation.
Yes, but with a few important details:
- Interest on your investment loan is tax-deductible (the principal repayments are not).
- Insurance premiums (building and landlord insurance) are claimable.
- Negative gearing allows you to offset property losses against other income.
- Land tax is deductible where applicable.
- Other allowable deductions include maintenance costs, property management fees, and depreciation on eligible assets.
Smart strategies include:
- Leveraging negative gearing.
- Claiming all legitimate deductions (interest, LMI, insurance, maintenance, depreciation).
- Organising a Depreciation Schedule to maximise claims.
- Pre-paying interest or expenses before the financial year ends.
Partnering with a tax advisor ensures you’re claiming everything you’re entitled to.
No, salary sacrificing is generally not available for mortgage repayments on personal or investment properties. Salary packaging tends to apply to novated leases (vehicles). For property investors, focusing on maximising deductions and structuring loans effectively is a more practical tax-saving strategy.
Absolutely. Most investors finance their property purchases through a mortgage. If your deposit is less than 20%, you might need to pay LMI unless you qualify for a waiver.
The 6-year rule allows you to treat an investment property as your Principal Place of Residence (PPOR) for up to six years after moving out. This can exempt you from paying CGT during that period, provided you haven’t nominated another PPOR.
The key insurances to protect your investment include:
- Landlord Insurance (covers rental loss and tenant damage)
- Building Insurance (for structural damage)
- Public Liability Insurance (protects against legal claims)
Comprehensive landlord policies often combine these covers for convenience.
Effective CGT strategies include:
- Applying the 6-year PPOR rule.
- Holding the property for over 12 months to qualify for the 50% CGT discount.
- Offsetting gains with any capital losses.
- Structuring ownership through trusts or super funds to minimise the impact.
As CGT strategies can be complex, professional tax advice is highly recommended.
Yes, you can claim costs for repairs and maintenance—like painting—that restore the property to its original condition. However, renovations or improvements that increase the property’s value must be claimed through depreciation over time.
Yes, rental income is taxable whether or not there’s a mortgage. The good news is that interest payments, maintenance costs, insurance, and other property-related expenses can be claimed as deductions, which helps reduce your taxable rental income—or even creates a tax-deductible loss through negative gearing.
