Last Updated: 17th May, 2024

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Nobody wants to pay Lenders Mortgage Insurance, but not everybody has a 20% deposit. So, LMI allows first home buyers to buy a home with a lower deposit sooner, however they can be quite expensive.

Luckily, a few of our lenders offer significant LMI discounts for first home buyers.

Eligible first home buyers can reduce Lenders Mortgage Insurance fee by as much as 25%-33%. That saves you thousands of dollars.

Additionally, first home buyers can also benefit from grants such as the first home loan deposit scheme (FHLDS), first home owners grant (FHOG) and stamp duty concessions.

What is Lenders Mortgage Insurance (LMI)?

Lender’s mortgage insurance is an insurance that protects the banks or lenders when the borrower’s deposit is less than 20% of the property’s purchase price.

Generally, you are not required to pay this upfront. It is added to your loan.

The LMI fee depends on several variables, including the loan amount and the deposit amount, so it can vary significantly.

Please use our LMI calculator to get an estimate.

What LMI discounts are available right now?

15% LMI Discount For First-home Buyers

One of our lenders is now offering attractive discounts on Lenders Mortgage Insurance (LMI) under specific conditions, providing more flexibility and savings for homebuyers.

  • Upfront Payment Discount: If you pay the LMI premium upfront when you buy an owner-occupier or investment property, you are eligible for a generous 15% discount on LMI.
  • First-home Buyer Discount: First-time home buyers get a calculated discount which is dependent on the loan’s attributes.
  • Combined Discounts: First-home buyers opting to pay LMI upfront can enjoy an additional discount of up to 15%, applied after calculating the First Home Buyer discount.

These discounts apply to new purchases, top-ups and refinances. If you choose the upfront payment option for an LMI discount, ensure the funds are with your conveyancer on settlement day. The upfront amount can be paid by the loan applicant, a family member, or any other person.

What does this mean for you?

For our clients, we typically add the LMI premium to the loan amount instead of requiring an upfront payment. This means if a client needs a loan of $500,000 and the LMI is $20,000, we would apply for a loan of $520,000. While this approach spares clients from paying the LMI upfront, it does increase the loan amount.

So, the discounted LMI becomes particularly beneficial for clients who might not have the borrowing power to handle a loan amount of $520,000 but have spare funds amounting to the LMI premium. In such cases, they can use these funds to settle the LMI separately upfront. However, it’s worth noting that this scenario might apply to only a small subset of clients.

Tips: LMI Discounts for first home buyers

Add some tips such as:
  • Compare LMI premiums. Lenders know that first home buyers mostly focus on interest rates so they’ll charge you more in LMI fees. So it makes sense to shop around for a loan that has a good interest rate and discounts on LMI.
  • Read the fine print. The terms and conditions of these offers are very specific. E.g. some lenders may have a minimum taxable income requirement.
  • Grow your knowledge base. Check our first home buyers guide that covers the entire home buying journey.

Apply for a home loan with LMI discounts

At any point in time, our mortgage brokers know which lenders are offering great interest rates with significant LMI discounts.

Some lenders offer specials in an attempt to gain additional market share, our mortgage brokers are aware of them but in many cases, these LMI specials are not advertised to the public.

To find out which LMI discounted home loan you qualify for, please complete our free assessment form or call us on 1300 889 743 and discuss your situation with one of our specialist mortgage brokers.