Can I avoid LMI?

Unlike 90% or 95% home loans, the qualifying criteria is less strict and the Lenders Mortgage Insurance is significantly cheaper when it comes to an 85% home loan.

In fact, the LMI premium can even be waived!

Two of our lenders can help!

  • Max loan $1,000,000 at 85%.
  • Max $1,500,000 in total loans with no LMI.
  • You must have a clear credit history.
  • You may need to meet minimum income criteria with some lenders.
  • This is for low risk borrowers only, strict criteria apply.

This is an unbelievable discount that could save you thousands of dollars in mortgage insurance!

You can read the eligibility criteria on our no LMI page.

Call us on 1300 889 743 or enquire online for more information.


Do I qualify for an 85% home loan?

These days, banks are becoming more particular about the customers that they lend to.

So what are Australian lenders looking for?

  • Clear credit history: This means that your credit file has no blemishes whatsoever and you have paid all of your bills such as rent, credit cards, personal loans and other debts on time, every time for the last 6 months.
  • Stable employment: In most cases, you must have been in your current job for the past 6 months or more to qualify but sometimes an exception can be made to this policy.
  • An excellent income: Lenders are more conservative when assessing your ability to repay any loan over 80% of the property value.
  • Strong asset position: Lenders want to see that you have a good asset position relative to your age and income.
  • Genuine savings: Many lenders require you to have saved 5% of the purchase price but not every lender has this requirement! Some will allow you to borrow with no genuine savings!

If you don’t fit the box then please enquire online to speak with one of our mortgage brokers that specialises in loans over 80% of the property value.


Waived LMI or a negotiated interest rate?

What are the LMI premium rates on an 85% LVR home loan?

Here are the LMI rates for different home loan sizes from one of our banks:

  • Up to $300,000: 0.70%
  • Up to $500,000: 0.97%
  • Up to $1,000,000: 1.42%
  • Over $1,000,000: 1.53%

If you’re borrowing up to $500,000 it’s usually better to get a negotiated interest rate!

The cost of LMI is relatively low and an interest rate discount can easily beat the saving in your mortgage insurance premium.

If you’re borrowing over $500,000 or can pay off the loan quickly then it’s best to apply for a lender with no LMI!

Once you’ve paid the loan off to 80% of your property’s value or your property has grown in value then you can refinance to a low rate home loan.

Please call us on 1300 889 743 or enquire online and we’ll work out the best option for you.


Tips for borrowing up to 85%

Most people who borrow over 80% of the property value know the importance of shopping around to get a good deal.

What is it you should be looking for when comparing mortgages?

  • Do you meet the lender’s credit criteria? In particular, does the lender have a genuine savings policy (read below for more information).
  • Have you compared the LMI? One of our lenders will waive the LMI for loans up to 85% of the property value. If you qualify for this offer you can save thousands!
  • Will your lender allow you to capitalise the LMI premium?
  • In addition to this, don’t forget to compare all other aspects of the loan such as the interest rate, repayment terms, features and to ask about any hidden fees or charges.

Do I need genuine savings?

Some lenders require evidence that you have saved 5% of the purchase price in either a savings account, shares or a term deposit.

However, other lenders can consider a gift from your parents or a lump sum deposit as evidence of savings!

This means that, in most cases, you can borrow 85% with no genuine savings.

Speak to our mortgage brokers on 1300 889 743 or enquire online and a member of our expert team will help you get the best package!


Compare the LMI, not just the rate

Did you know that each lender has different LMI premium rates?

Often two loans with the same rate will actually have very different LMI premiums and, in some cases, the difference can be in the thousands of dollars.

We recommend that you use our LMI premium calculator to compare lenders and find out how much you are likely to pay in LMI.

Did you know that very low risk borrowers may be eligible for significantly discounted LMI?

The criteria for this type of loan is very strict so find out more on our discounted LMI page.

Many people who apply for an 85% loan can qualify for a special LMI discount or pay no LMI at all!

These discounts are only available from a select few lenders that are in a good funding positions.


Which lenders are most competitive?

Each lenders’ pricing changes on a regular basis.

We recommend that you call us or enquire online so one of our mortgage brokers can help you to compare the different options available.


How big of a deposit do I need?

As a general rule, first home buyers will need around 15% of the purchase price in funds to be able to make up the shortfall between the loan and the purchase price.

Second home buyers and investors will generally need 19% of the purchase price.

This amount can vary depending on the first home owner grants and stamp duty rates applicable for your state.


Talk to a specialist mortgage broker

Our mortgage brokers are extensively trained in comparing loans that are for over 80% of the property value.

Did you know that most other mortgage brokers are not even aware that each lender charges different LMI premiums?

Fewer still actually compare LMI as part of the loan selection process!

Please call us or enquire online and one of our expert mortgage brokers can help you to get pre-approved for an 85% home loan.

  • Daisey

    Hi, regarding the 85% home loan, I believe I meet all the criteria to qualify for it. Do I have the option to choose the LMI capitalization or do the different banks have different policies regarding this? I want more money now, so I want LMI to be added on my loan rather than deducting the LMI from the loan amount?

  • Hi Daisey,

    You could get waived LMI if you’re certain professional, however you need to have clean credit history and other stringent criteria of the lender needs to be fulfilled. You could refer to https://www.homeloanexperts.com.au/lenders-mortgage-insurance/lmi-discounts-and-no-lmi/ for more information on this.

    Generally, lenders deduct the LMI from the total loan amount, however if you want LMI to be capped, then we could increase the loan amount accordingly so that you could obtain the desired loan amount. Also, you may require a smaller deposit by capping your LMI since you are not paying from the money from your deposit.

  • There are new rate discounts available at 85% LVR which may be cheaper than avoiding LMI. Please contact us on 1300 889 743 for the details.

  • stoate

    How much in LMI premium can I expect to pay to borrow $750k at 85% LVR?

  • Hey stoate,

    One of our banks charges 1.23% on LMI for loans of more than $500k up to $1 million. For more loan sizes, you can check out the second section of this page itself titled “Waived LMI or negotiated interest rate?” You can also check out the LMI premium rates page for a detailed list:
    https://www.homeloanexperts.com.au/lenders-mortgage-insurance/lmi-premium-rates/

  • mutch

    I can go for an 85% lend but my friend told me that there’s an interest rate discount offered for a 90% lend. What type of offer is this?

  • Hi mutch,

    One lender currently has a 1.40% discount as a special offer for all loans over $500,000 & 1.30% for all loans over $250,000 up to $500,000 so please check out the 90% home loan page to find out how to qualify:
    https://www.homeloanexperts.com.au/no-deposit-home-loans/90-percent-home-loan/

  • timmy

    I moved here from Canada but I have PR now. I would like to buy a $435,000 property with the help of a 85% LVR loan. I’m currently on probation though. Can you help?

  • Hey timmy, we know of a lender that commonly deals with people that have similar situations like yours. Please call 1300 889 743 to discuss your situation and loan needs in detail with one of our experts.

  • Pit

    My earnings are over $130,000 in a year so I should qualify for waived LMI with this but what’s the max LVR that I can borrow?

  • Hi, your income does make it so that you can qualify but your max LVR actually depends on your profession. If you’re a medical professional, accountant, lawyer, mining engineer, pro athlete or an entertainment professional, your max LVR is 90%. However, if not, your max LVR is 85%.

  • Steven Pavlovic

    Hi I have purchased a house for $707500 and have a deposit of 150k I’m at around 84%. My yearly income is around 120k a year and I don’t want to pay LMI. What are the lenders you use??

  • Hi Steven
    Our lenders are listed here https://www.homeloanexperts.com.au/about_us/lenders/
    And reviews of them are here https://www.homeloanexperts.com.au/lender-reviews/
    We can assist with an 85% no LMI loan as long as you meet the qualifying criteria. Usually we compare the cost of LMI on the lowest rate loan available to the current rates for a waived LMI loan. Our goal is to find the lowest overall cost for you as just looking at rate or LMI doesn’t always give the best solution.
    If you’d like our help then please call us on 1300 889 743 and ask for a waived LMI specialist.

  • Ananda sagar

    HI I bought a land and am building on it. total cost: $615K. The land has appreciated. bank just valued and the total value including construction is $660K. I have a savings of approx 60K so I will be borrowing 555K plus LMI component. How do I compute the LVR? is it 555K/615K or 555K/660K

    I am doing my loan with Westpac and I am an Accountant. Is there a way I can avoid LMI?

    Also the stamp duty on LMI has been abolished from July 1. I am in the process of getting my loan approved. Does this help me at all ?

    Thank you

  • Hi Ananda,

    We’ve got some information on special accountant discounts here https://www.homeloanexperts.com.au/unusual-employment-loans/home-loan-discounts-accountants/

    There’s a few banks that offer waived LMI for accountants up to 90% LVR. The qualifying criteria is very strict. For one you need to have an income over $150,000 in NSW. For the other your loan must be no more than 4 times your partner & your incomes. For a loan of $555k your partner and you must have a combined taxable income of $139,000 excluding super. If you qualify for either of these then please call us on 1300 889 743 and ask for Daniel who is a specialist in accountant loans.

    The bank will usually calculate the LVR based on the lower of the cost (land + construction) or valuation. However if you signed the contract to buy the land some time ago (>12 months in most cases) then there is a case for them to use the valuation instead.

    If you do proceed and pay LMI on your loan then if the loan is formally approved after 1/7/17 then the LMI premium should not include stamp duty on the premium. This will save you approx 9% off of your LMI.

  • Ananda sagar

    Thank you Home lona experts for your quick response. My bank has now approved the loan however the LMI is based on the purchase price (615K) not the valuation amount (660K). I am being charged almost 15k for LMI (13.5K+stamp duty)
    I am a CPA qualified however my income is not 150k or more. So I believe I would not qualify for Accounting discounts.

    My concern is
    How many days to I have to accept the loan offer from the bank?

    In the mean time can I lodge another loan application with another bank to see if they offer me the lower mortgage insurance and if it gets approved after July 1st I can save on the stamp duty component as well.

    Is it a good idea to lodge another loan application prior to accepting the one I have approved or simply accept the loan currently I have.

    My land will be registered in July only and that when I will be needing the loan.

    Thank you.

  • Hi Ananda,
    You can accept the loan offer now but then let your conveyancer know not to proceed with asking for funds from that lender until you say so.
    Then you can apply with another lender and see how you go.
    If you are buying with a partner and your combined income is >$150k then let me know and we can still get you waived LMI. Or if you are renting out the property and the estimate rent income would get your income over $150k then we can assist.
    If you don’t qualify for waived LMI then we can go with a lender that will use the valuation not the purchase price for the purposes of calculating LMI. This is a bit hit and miss as we don’t know what another lender’s valuation will come in at. The good news is that we can do an up front valuation without submitting a loan and then if it’s good we can proceed with a full application.

  • Ananda sagar

    Thank you So much.

    I am claiming the FHOG so not using it as an investment at the moment.

    Does that mean I can accept the loan and apply for another one until the settlement for the land is due. I guess until then we would not be needing the funds out from the bank.

    Once I accept the loan from the current bank that has approved the loan wouldn’t I be committed to its terms and conditions? Would there be any penalty if later I say I do not want to proceed with them?

    What if the loan from the New bank gets rejected? Does it have a negative consequences on the loan I would have accepted already ? I want to save on the LMI but just playing safe.

    Thank you :)

  • Yes you can accept the current loan and still apply for a new loan. Just notify your conveyancer of your plans. There’s no penalty if you don’t proceed.
    A new loan being rejected will not affect your current loan offer.

  • Michelle

    Hi My husband and I are in the middle of a loan application for a new home, my annual salary is $125k and husbands $92 – property we wish to purchase is $780 and we have deposit of $175. Bank has valued our property at $710 based on sold properties in last 6 months (there are no comparable houses in the area for the same period). We have requested further valuation to be undertaken and the bank advise they are unable to provide further valuation. They advise there is a $17k LMI. We calculate the property and taking into consideration total loan with fees/SD we’d require total $813, that giving LVR of 85%. We want to avoid LMI can you advise how we go about this please.

  • Hi Michelle,
    We can order a free up front valuation with 11 of the lenders on our panel. It’s quite possible that we select the 2 or 3 cheapest lenders for your situation and get them to value your property to see if they will come in at a more reasonable figure. In addition to this we have some lenders who also do 85% with no LMI and they may be a good option if the valuation you already have is accurate (i.e. other lenders will not come in higher).
    I’ll email you some more details and cc our expert in 85% with no LMI.