Compare cheap or free LMI offers
Mortgage insurance for lenders can be very costly, but luckily there are some banks and lenders who offer discounts or special LMI deals.
LMI, or mortgage insurance for lenders, is essentially an insurance premium that YOU pay to cover the risk to your lender. The risk to the lender is to take you as the borrower with a smaller deposit. LMI can add tens of thousands to your home loan, depending on the provider and deposit size. It is also often activated in the loan – unless you pay upfront – which makes it even more expensive since interest is charged.
However, there are some discounts and offers for LMI from some banks and lenders, which we will discuss below.
Would you like to buy your own home or refinance? The table below shows home loans with some of the lowest interest rates in the owner-occupier market.
|Tariff type||Offset||Draw again||Ongoing fee||Upfront fees||LVR||Repayment of the lump sum||Additional repayments||Pre-approval|
|SELECTEDLIMITED TIME OFFER|
Smart Booster Home Loan With Variable Discount – 2 Years (LVR.)
|SELECTED100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES|
Low Interest Home Loans – Prime (Principle and Interest) (Owner Occupied) (LVR
|SELECTEDREFINANCING IN MINUTES, NOT WEEKS|
Nano Home Equity Loans Variable Owner Occupied, Principal and Interest (Refinance Only)
|SELECTEDYOU COULD WIN $ 100,000 TO PAY YOUR LOAN *||
Owner Occupier Accelerates – Celebrate (LVR.)
Owner Occupier Accelerates – Celebrate (LVR.)
|SELECTEDA SIMPLE ONLINE APPLICATION|
Yard Home Loan (Principle and Interest) (Special) (LVR.)
- Fast processing times, can take 30 days to complete
- For purchase and refinancing, at least 20% down payment
- No ongoing or monthly fees, add 0.10% offset
Low or Free LMI Home Loans and Offers
There are generally few ways borrowers can pay low or no LMI premiums, including:
Another way, however, is through a special offer or deal. The competitive home loan market in Australia means that lenders will compete for good borrowers with tempting discounts and promotions. Recently, some of them have included a discounted or waived LMI for those with a 15% deposit.
The list below is not exhaustive – these are only advance offers. You might find that lenders are a little more flexible on a case-by-case basis, especially if you’re a doctor or in another reputable profession. You may also receive special broker-only offers. So if you are using a mortgage broker it may be worth speaking to them directly.
We have tried our best to list some of these offers below, but remember – “Specials” can end at anytime.
UBank waives the LMI on some home loan products if the borrower has a 15% deposit – 85% LVR.
In fact, LMI will waive all home loans – variable and one-, three-, and five-year fixed options – for owner-occupiers if they have a 15-20% down payment and pay principal and interest (P&I).
According to UBank, owner-occupiers could save $ 5,000 in insurance costs on an average loan of $ 480,000 by saving $ 72,000 (15%) instead of $ 96,000 (20%) on a deposit.
Neobank, now owned by NAB, waives LMI for owner-occupiers who make P&I payments with a down payment of 15%. It is available through the variable home loans âNeatâ and âOwnâ as well as fixed home loans for one, two, three or five years.
The main difference between the “Neat” and “Own” product lines is that the own line has an offset account.
86,400 cracked the numbers to find that Sydney borrowers saved more than $ 10,000 on average home value.
St. George Bank, Bank of Melbourne, BankSA
The Westpac subsidiaries have their ongoing and popular offering of 1 LMI. If you’re a first-time home buyer with P&I payments and have a 15% down payment, you pay just $ 1 on LMI with a maximum loan amount of $ 850,000 (i.e., a home value of $ 1 million).
Only one applicant needs to be a first-time home buyer. St. George is available for basic variable and fixed rate product lines or variable home loan offerings under the Value Package product line – an annual package fee of $ 395 applies.
St. George says a family buying a $ 650,000 home could save around $ 6,000 in bonuses by taking advantage of the offer.
RAMS, owned by Westpac, has an offering that enables first-time home buyers paying P&I to save up to $ 5,000 in LMI rewards. It is interesting that the offer is available for first-time home buyers or as an investment loan, so that ârentvestâ is possible.
Like other Westpac subsidiaries mentioned above, RAMS charges $ 1 for LMI. For rewards that cost more than $ 5,000, the bank will deposit $ 5,000. The difference between RAMS is that it is available for deposits as low as 5% or 95% LVR.
However, on a $ 500,000 home with 95% LVR, the LMI premiums could be nearly $ 15,000 anyway, meaning the borrower has nearly $ 10,000 out of their pocket, and ultimately more if LMI is included in the loan.
Advantages of LMI offers and discounts
Enter the market faster
With a smaller deposit, you can get into the market faster and the capital gains could quickly outweigh the additional interest on the home loan. It gets your foot in the door too, and your down payment won’t wane with the spiraling home prices. However, appreciation is not guaranteed.
Stop treading water and earn little savings interest
It can be demoralizing to be a diligent saver and see that your money is barely making any interest. Real saving can even backwards, considering inflation – it’s almost as if the world just wants you to throw caution to the wind. As is often said these days, the best savings account is usually to top up your home loan with money.
Build up equity and refinance
Because you get into the market earlier, you can start repaying your home loan earlier and start building equity. If you are not impressed with your home loan interest rate, you can usually refinance it once you have built up at least 20% equity and a more competitive interest rate.
Disadvantages of LMI offers and discounts
Higher interest rate
Many of these home loans do not offer the lowest interest rates – the lowest interest rates are usually reserved for those who have a deposit of 20% or more. You need to balance the additional interest against the time spent saving a deposit and the potential for capital gains.
Compare LMI awards
Not all LMI awards are created equal. Depending on the provider, lender and your deposit size, the premiums can vary widely, between 0.5% and more than 4.5% of the property value are common. This could add up to tens of thousands of dollars, which could even outweigh the LMI rebate.
May not offer much benefit
The home loan offers typically waive LMI for borrowers with a 15% down payment. You have to stop and wonder if it really is that much more arduous task to save 20% and find a more competitive home loan. This is ultimately a personal choice.
As with most things in life, there is no such thing as free lunch. While these offers give you a discount on LMI, you may have to compromise on other areas. As always, look around and think about your own finances and budget before applying for a home loan.
Photo by Maria Ziegler on Unsplash
When selecting the above products, the entire market was not considered. Rather, a stripped-down portion of the market was considered, including retail products from at least the four major banks, the ten largest customer-owned institutions, and Australia’s larger non-banks:
Some vendors’ products may not be available in all states. In order to be considered, the product and the price must be clearly published on the product provider’s website.
In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To learn how Savings.com.au handles potential conflicts of interest and how we are paid, please click through the website links.
*Comparison rate is based on a $ 150,000 loan over 25 years. Please note that the comparison price only applies to the examples given. Different loan amounts and terms lead to different comparison rates. Costs such as redemption fees and cost savings such as fee exemptions are not included in the comparison price, but can affect the cost of the loan.