LMI discounts and no LMI

How to get the cheapest LMI premium

Everyone knows that a lower interest rate is better than a higher rate. However, few people realise that different lenders have different LMI premiums. What most people also don’t know, is that savings are often far more significant than any difference in interest rate.

Have you ever seen an ad on TV claiming that a lender has the cheapest LMI premiums available? No? This is because lenders don’t advertise their premium rates! The best way to find the cheapest LMI premium is to call us on 1300 889 743 or enquire online and let one of our experienced mortgage brokers compare the loans for you.

Waived LMI / Discounted LMI

Although it is increasingly rare, it may be possible to get the lender to waive your LMI completely or to charge a negligible amount. However, most lenders require that you meet the following criteria:

Waived LMI

If you meet this criteria please enquire online or call 1300 889 743 and ask to speak to one of our mortgage brokers who specialises in no LMI Home Loans.

Reduced LMI / Discounted LMI

  • You are buying a property (refinances are not accepted).
  • You have at least 5% in genuine savings.
  • You are borrowing no more than 95% of the property value.
  • The main income earner must have been in their job for at least two years (the borrower with the lower income must be over 12 months in their job).
  • You have a perfect credit history.
  • You are borrowing no more than $800,000.
  • The property you are buying must be in a capital city or major regional centre.

If you meet these criteria then please enquire online or call us on 1300 889 743 and we’ll see if we can get you either an LMI waiver or a drastically reduced premium at a fantastic interest rate.

Note: there are no exceptions made to the above criteria.

Basic tips to reduce your LMI premium

The first step to getting the best premium is to understand how the LMI premium is calculated and see if there is anything you can do to qualify for a cheaper premium. The factors you should consider include:

  • The loan amount: The larger your loan the higher the percentage of the loan amount the mortgage insurer will charge you. Loans less than $300,000 have very cheap LMI, loans between $300,000 and $500,000 have moderate LMI and loans greater than $500,000 have very expensive LMI. If you are borrowing $300,001 you could reduce your loan by just $1 and immediately save as much as $800!
  • The LVR: The LVR of your loan is the percentage of the property value that you are borrowing. If you are borrowing $900,000 secured on a $1,000,000 property then you are borrowing 90% and therefore you have 90% LVR. The higher your LVR the higher your LMI premium. There is a significant increase in the premium when you borrow just $1 over 90% or over 95%. If you are close to these thresholds then reduce your loan amount to 90% or 95% and you can easily save a thousand dollars or more.
  • The lender/mortgage insurer: Different lenders and insurers have different LMI premiums. This is because they see the risk of different loan types, loan amounts and types of borrowers in different ways, and price their premiums accordingly.

    To find the cheapest LMI providers please enquire online or call us on 1300 889 743 to talk to one of our mortgage brokers.

First Home Buyer discounts

Select fee mortgage insurance companies have a 15% discount on their LMI premium for first home buyers. Note that this is only available through the lenders that deal with these specific LMI providers. Not all lenders provide this.

Genuine savings discounts

Some mortgage insurers have several LMI products. Their Standard LMI is usually for people who can demonstrate that they have a saved deposit. In many cases they may also have a no genuine savings product (such as the Genworth Financial “Homebuyer Plus” product).

  • 5% genuine savings allows you to get standard LMI rates
  • No genuine savings may mean you pay a higher LMI rate
  • No genuine savings & your deposit being borrowed (e.g. personal loan, loan from parents) may mean your premium is even higher than a no genuine savings premium.

This varies between lenders with some having one set of premiums for all borrowers and others loading the premium depending on various factors.

Choose the cheapest provider

The best way for most people to get the lowest possible LMI premium is to apply with a lender that uses a very cheap LMI provider. Lenders do not publish their LMI rates to the general public and do not disclose which LMI company insures their loans. Enquire online or contact us on 1300 889 743 and one of our mortgage brokers can help you find the cheapest premium.

Guarantor loans

If you have a guarantor for your loan that is supporting your loan application by providing their house as additional security, then you will not pay any LMI, even if you are borrowing 100% of the property value.

This is because when the guarantor’s property is taken into account, you will be borrowing less than 80% of the total value of both properties, so the lender will be happy to approve your mortgage without Lenders Mortgage Insurance (LMI).

Apply for a home loan

Here at the Home Loan Experts our mortgage brokers know which Lenders Mortgage Insurers are the cheapest. Some lenders offer specials in an attempt to gain additional market share, and in many cases, these LMI specials are not advertised to the public. Please enquire online or call us on 1300 889 743 to discuss your situation with one of our mortgage brokers.