Home Loans For Teachers

Find the right home loan for you as an education professional by comparing your options with Savvy.

Last updated on April 20th, 2022 at 11:00 am by Thomas Perrotta

Mortgage offers for teachers and education professionals

You may not think that being a teacher entitles you to any special treatment when it comes to applying for a loan, but this isn’t always the case. To take advantage of special offers available to teachers and education professionals, it’s crucial to compare as many options as possible to find the one which best suits your needs, which you can do right here with Savvy.

How do home loans for teachers work?

A teacher mortgage, or teacher home loan program, is no different to a standard home loan offered by any lender in terms of the way that they’re structured: you apply for a home loan with a set deposit and, if approved, repay your debt over a period of 25 to 30 years (typically) in regular instalments with interest. All of this is consistent with what you might expect with any other standard profession.

However, what teachers can receive from some lenders is a waiver or discount on Lenders Mortgage Insurance (LMI). LMI is a policy taken out by your lender designed to protect them in the event you end up defaulting on your loan and they lose money. It’s usually waived by lenders for borrowers with a deposit of at least 20% of the value of the property they’re purchasing. For teachers, though, an LMI waiver can be offered for deposits of 15%, giving you an extra 5% of leeway before the policy kicks in.

Even for deposits of substantially less than 15%, there are some lenders who will be willing to approve home loans for teachers with a discounted LMI policy. For instance, you may be able to offer a 5% deposit (or sometimes even 3% with specialist lenders) without paying the full price for LMI that another borrower would in the same position. All of this is to do with the job security that teachers have once they’re made permanent. Stable income and job security are high on the priority lists of lenders when processing applications.

What are the eligibility criteria for teacher mortgages?

When applying for a home loan as a teacher, you’ll need to meet a series of eligibility criteria, both standard and relating to teachers specifically. These include:

Your job

Lenders will look for borrowers who’ve been working in their job for an extended period prior to their application, but this isn’t always a necessity. You can usually apply after three months in your permanent position (either full-time or part-time) and after the completion of your probationary period. This will be shown via recent payslips and/or bank statements. If you work part-time, however, you may find that your lender will want to know more about the hours you work each week.

Any number of education professionals can qualify for a home loan for teachers. To receive an LMI waiver or reduction, you’ll have to be one of the following:

  • School teacher
  • Specialist teacher
  • Tutor
  • TAFE or university lecturer
  • Educational trainer

Your income

An extension of the requirement for you to hold stable employment is also to be earning a consistent and comfortable income. As a teacher or education professional with permanency, this shouldn’t be too great an issue for you. However, what is relevant to consider is how comfortable you are with your income in relation to your other expenses. If a significant portion of the income goes towards household bills and living expenses for you and your family, for instance, there’ll be less to work with in terms of putting funds aside for your home loan repayments.

Your deposit

Of course, you’ll need to supply a sufficient deposit towards the purchase of your home. As mentioned, some lenders will be willing to waive LMI up to 85% LVR, meaning you’d only be required to submit a minimum of a 15% deposit to avoid it. However, this isn’t the case across the board, so you should always compare lenders to ensure you’re signing up to the right one for you. At least part of this, if not all, will have to be through genuine savings, which is another consideration for lenders assessing your application.

Your credit history

Whilst your credit history and score likely won’t form a major part of your application, since your loan is backed by a significant sellable asset, it’s still assessed by lenders. If you have a recent history of defaulting or bankruptcy, your lender may choose to decline your application or accept it requiring a larger deposit or charging higher interest and fees.

Top tips for increasing your teacher mortgage approval chances

Compare home loans with Savvy

A large part of the home loan process is ensuring you’re confident that you’re signing up for the right loan. Fortunately, comparing with Savvy can help you do just that. Considering more options throughout this process will put you in a better position to ultimately decide on which is the best for you and which lender is the most likely to approve your application on favourable conditions.

Avoid job changes before applying

Lenders value job security and stability very highly, so the longer you’ve been in your job and earning the same (or similar) salary, the better. If you’re in the process of looking for a home loan and a new job crops up which you’re interested in, it’s important to understand that accepting it may compromise your ability to get approved for the loan you want.

Show strong evidence of savings

Paying off a home loan is a marathon effort potentially taking place over decades, so it requires a great deal of discipline in terms of money management. Lenders will want to see any indication they can that you possess financial discipline and won’t be tempted to burn through your money and leave your loan in the lurch. Building your savings over time consistently will help you get approved.

Don’t apply for more than one loan at a time

Of course, you should only focus on one home loan application at any given time. Applying for multiple in quick succession, particularly if they’re rejections, may ward off potential suitors and ultimately make it harder for you to get approved. The applications you make will also count towards your credit score and decrease it if you make too many in close proximity.

More questions about house deposits and how to save for them

Can I get approved for a home loan as a casual or relief teacher?

Yes – it’s not quite as easy to get approved as a casual worker when compared to those with permanency, but you can still access a home loan. Lenders will usually require at least six months in your current position, rather than three, and evidence of a consistent income and stable working hours. You’ll also need to supply a greater number of payslips, often around three months’ worth.

Am I able to access LMI reductions if I’m studying to be a teacher?

In some cases, yes – there are specialist lenders who may be willing to approve your home loan application with an LMI waiver or reduction even if you’re still studying to become a teacher. However, this isn’t always the case and will largely depend on your current employment and how much you’re earning from that. Your best chance of receiving LMI reductions is to be working as a teacher.

Will I have to pay LMI if I apply with a guarantor?

No – a guarantor is another way to sidestep the requirement to pay LMI on a smaller deposit. This is a person who signs on to take on your home loan repayments in the event you become unable to do so. In most cases, this will be a parent or grandparent who is required to be in a comfortable financial position and have equity in property. With a guarantor, you can be approved for up to 100% of the value of your property, or even more, without needing you to put any money upfront or pay LMI.

Which documents will I need to apply for a home loan?

There are many documents you’ll need for a standard home loan application. These include:

  • Personal photo ID
  • Your two most recent payslips
  • Record of any other income you receive (such as from investments)
  • Details on your assets and liabilities
  • Record of your regular expenses
Are government grants still accessible on top of LMI reductions?

Yes – you’ll still be eligible to receive grants such as the First Home Owner Grant (FHOG) or the First Home Loan Deposit Scheme (FHLDS) even with teacher home loan program deals applying. This means you can receive a lump sum of up to $15,000 (depending on where you live) with the FHOG and reduce the size of your deposit to 5% without paying LMI with FHLDS.

Can any of my home loan fees be waived as well?

Yes – lenders are flexible and many cater their offers for teachers by not only reducing the cost of LMI, but also reducing or waiving certain fees also. For instance, the application fee which is usually charged on mortgages, which can range from $150 to $700, is often waived by lenders. The same goes for monthly fees, which may set you back between $5 and $20 every month of your loan repayments.

Am I better off getting a home loan through a broker?

You may be – a mortgage broker is a professional who draws on their relationships with lenders around the country to help find you the best loan deal for your needs. Broker home loans can often come with lower interest rates and better overall conditions, as brokers can negotiate better deals than standard consumers are able to.