Last Updated: 29th September, 2023
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Important: There are no longer any lenders in Australia offering No Deposit Loans. You can still borrow 100% with a Guarantor Loan.
Which lender has the cheapest LMI?
Every lender has different LMI premiums so it’s critical to shop around for your no deposit loan.
The problem is that lenders don’t publish their LMI rates on their websites.
The only ways to find out their LMI premiums are to call every bank or use a mortgage broker.Essential guides and tools
What is LMI?
Lenders mortgage insurance (LMI) is a type of insurance that protects the lender from losses in the event that you were to default on your loan. Genworth, PMI, WLMI, SGI and ANZ LMI are some of the common LMI providers in Australia. Note that the lender will obtain the insurance behind the scenes, however you will have the pay for the premium! Although you receive no direct benefit from obtaining lenders mortgage insurance, the bank would not approve your loan without it. So in effect, LMI allows banks to approve loans that would otherwise be too risky and so in turn allow you to borrow more than 80% of the purchase price. LMI is a one-time fee and it is charged when your loan is advanced.Which lenders use LMI and risk fees?
Some lenders prefer to use a third party insurer such as PMI or Genworth to insure their loans. Other lenders have their own in house insurance companies and so, are insuring themselves. A few select lenders simply charge you a “risk fee” and approve your loan without LMI, but in effect have achieved the same goal under a different name. One prominent example of this is St. George with their “LEF” risk fee as well as their own insurer St. George Insurance (SGI).- Who uses LMI? : ANZ, CBA, NAB, Westpac, ING, Suncorp, St. George, Widebay Capricorn, AMP, Citibank and many more.
- Who has their own insurer?: ANZ, Westpac, St. George and Widebay Capricorn.
- Who can charge a risk fee?: St. George (LEF), ING and most non-conforming lenders.
What determines the LMI premium?
The LMI premium is calculated based on the loan amount, Loan to Value Ratio (LVR), LMI product type (e.g. First home buyer, non genuine savings, low doc, 100% loan etc) and the lender. Did you know that even though Genworth and PMI deal with most lenders, they have different pricing for different lenders? Hint: If you borrow less than $300,000 your LMI will be incredibly cheap. If you borrow just over $300,000 then your LMI may increase by several thousand dollars. The same leap occurs when you borrow more than $500,000. This is because lenders have different premium rates depending on if your loan is less than $300,000, less than $500,000 or more than $500,000.How large can LMI premiums be?
The LMI table below is an example only and does not include your state governments stamp duty, if applicable (usually 10% of the premium).First Home Buyer – 100% Loan LMI
- Less than $300,000: 2.02% to 2.85% of the loan amount.
- $300,000 to $500,000: 2.61% to 3.71% of the loan amount.
- Greater than $500,000: 3.33% to 3.42% of the loan amount
2nd Home Buyer – 100% Loan LMI
- Less than $300,000: 2.02% to 2.85% of the loan amount.
- $300,000 to $500,000: 2.61% to 3.71% of the loan amount.
- Greater than $500,000: 3.33% to 3.42% of the loan amount.
Investor / Investment – 100% Loan LMI
- Less than $300,000: 2.50% to 2.56% of the loan amount.
- $300,000 to $500,000: 2.99% to 3.34% of the loan amount.
- Greater than $500,000: 3.55% of the loan amount.
Quick start no LMI loans – 100% Loan without LMI
- Less than $300,000: No LMI is payable.
- $300,000 to $500,000: No LMI is payable.
- Greater than $500,000: No LMI is payable.
