How LMI can help you save money on a first home

UNLOCK homeownership with a lower deposit through Lenders Mortgage Insurance.

For many first-time buyers, saving a 20 per cent deposit can feel overwhelming. Lenders Mortgage Insurance (LMI) provides a solution, allowing you to enter the property market sooner with a smaller deposit. While LMI is an additional cost, it can actually help you save money in the long run by fast-tracking homeownership and avoiding rising property prices.

What is LMI?

Lenders Mortgage Insurance protects the lender if a borrower defaults on their loan. It’s typically required when a buyer has less than a 20 per cent deposit. However, LMI benefits buyers as well, making homeownership possible with as little as a 5-10 per cent deposit, reducing the initial financial burden.

How LMI can save you money

1. Enter the market sooner

Instead of spending years saving a full 20 per cent deposit, LMI allows you to buy a home sooner, which is particularly beneficial in a rising market where waiting could mean paying a higher price.

2. Start paying off your loan earlier

With LMI, you can begin paying down your mortgage sooner, potentially reducing the total interest paid over time — especially if you make extra repayments when possible.

3. Benefit from property value growth

If property prices are increasing, buying earlier with LMI means you start benefiting from capital growth sooner, putting you in a stronger financial position over time.

4. Tax benefits for investment properties

For first-home buyers purchasing an investment property, LMI premiums may be tax-deductible over time, offering additional financial advantages.

How much does LMI cost?

LMI costs typically range from 1 per cent to 3 per cent of the loan amount. Many lenders allow borrowers to capitalise LMI into the loan, spreading the cost over the life of the mortgage to reduce the upfront financial impact.

Is LMI right for you?

LMI can be a smart strategy for getting into the property market sooner without waiting to save a full 20 per cent deposit. However, it’s important to assess your financial situation and future plans. Speaking with a mortgage broker can help you evaluate the costs and benefits based on your circumstances.

By using LMI, first-home buyers can seize opportunities sooner, potentially saving money in the long run while making homeownership a reality.

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