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👉 Lenders Mortgage Insurance: Secret Weapon or Money Down the Drain?
Waiting 3 years to save a full deposit could cost you over $120,000 in missed property growth.
💸 But paying just $15K in LMI now could see you gain $100K in equity sooner.
Which would you choose?
A) Pay LMI and buy now
B) Wait and risk higher prices
📩 Comment your pick below!
Let’s be real—we’ve all felt the frustration.
Saving, sacrificing, budgeting... and still feeling like the goalpost keeps moving.
Meanwhile, property prices across Australia’s major markets continue to rise—fast.
If you’re one of the thousands of Australians holding off on buying property until you hit that magical 20% deposit, it’s time to ask yourself:
What’s that delay really costing you?
In today’s market, it could be $120,000 or more.
But what if there’s a smarter way to buy a home sooner—and do it without overextending yourself?
Let’s talk about Lenders Mortgage Insurance (LMI)—the most misunderstood yet powerful strategy in modern real estate investing.
LMI is a type of insurance that a lender requires when your home loan deposit is less than 20% of the purchase price. It's a one-off premium typically paid when borrowing over 80% of a property’s value.
This insurance that a lender takes helps protect the lender, not you, in case of loan default. If a borrower defaults on their home loan, LMI protects the lender by covering the shortfall if the sale of the property doesn’t recover the full outstanding loan balance.
LMI is insurance designed to provide assurance to the lender that they won’t face a risk of not recovering the loan amount, even if the property is sold for less than owed.
LMI is commonly misunderstood—but it can be the very thing that gets you into your first or next property sooner.
This is the math smart buyers look at.
Trying to save a 20% deposit on a $700,000 home? That’s $140,000, plus stamp duty and fees. No wonder buyers feel stuck.
But with LMI, you can enter with 10% or even 5%—a smaller deposit—and buy a home sooner.
One of our clients bought in Redbank Plains, QLD, with a 10% deposit in early 2022. By early 2024, the property had increased by over $120,000. If he’d waited, not only would the deposit target have been higher—he’d have missed the growth entirely.
Many buyers worry about how borrowing more than 80% of the property value affects their loan, their lender’s conditions, and their mortgage repayments.
Understanding how lenders calculate your borrowing capacity with LMI included can empower you to make smarter decisions.
If your deposit is less than 20, most lenders will automatically require LMI—making it essential to understand this cost upfront.
While paying LMI upfront avoids interest, most buyers pay the LMI premium by adding it to their loan.
That’s fine—especially when you use an offset account to reduce the interest cost on your mortgage.
If your loan is $700,000 and you have $50,000 in your offset account, you only pay interest on $650,000. Over time, that adds up to thousands in savings and gives you a buffer.
If you choose to pay for LMI upfront, it may reduce the fees and charges added to your loan.
Don’t assume all lenders charge the same.
A $400,000 home loan at 90% LVR might attract a $5,840 LMI premium from one lmi provider, but $7,800 from another.
The cost of the LMI can also vary based on your insurer, size of your deposit, and borrower profile.
💡 Mortgage planning means shopping smarter.
At Get RARE Properties, we work with trusted mortgage brokers to help you compare options.
If your situation meets certain criteria, your lender may even offer an LMI waiver.
Your LMI cost depends on loan amount, LVR, property type, and lender policy.
The LMI is insurance that helps you get into the market earlier, but the LMI fee can be significant if not planned for properly.
For some borrowers, this insurance premium may be worth it if it accelerates entry into a rising market.
Reducing your LVR even slightly (e.g. from 90% to 88%) can significantly reduce your LMI bill.
A client buying in Salisbury East borrowed 88% on a $650,000 home.
This saved them over $3,500 in LMI—and allowed them to keep more in their offset.
Reducing your LVR may also help you avoid paying LMI altogether.
Some lenders offer an LMI waiver for specific professions or high-income borrowers.
An LMI policy from a trusted mortgage insurer might also come with partial discounts under certain conditions.
If you have enough equity or a home deposit from another source like a guarantor, you may not need to pay for LMI at all.
▶️ Want to explore how? Watch:
Lenders Mortgage Insurance: Secret Weapon or Money Down the Drain?
Balancing your mortgage repayments in the event of income disruption requires a smart buffer plan.
Use offset accounts, emergency savings, and low-risk gearing.
If you default on your home loan and the property is sold for less than what you owe, your insurer will make a claim on your behalf.
They may seek to recover the shortfall, leaving you liable for the balance even after the proceeds from the sale are applied.
That’s why LMI is designed to protect the lender—not you.
In some cases, the lender may pursue you for the remaining balance—even years after the loan has ended—depending on the life of the loan and your state’s laws.
While LMI doesn’t benefit the borrower directly, LMI allows buyers to secure a mortgage with less savings, bringing forward home ownership by years.
“I didn’t even know LMI could be used this way. We bought 18 months earlier—and made over $110K in equity. Game-changer.”
— Sarah, Brisbane
📺 Step 1: Watch the video → Lenders Mortgage Insurance: Secret Weapon or Money Down the Drain?
📞 Step 2: Book a free strategy session with our team at Get RARE Properties – independent buyers agency.
🎓 Step 3: Register for our next Property Masterclass: https://getrare.com.au/financial-freedom
🕒 Spots are limited—don’t miss out.
LMI is required when you don’t have 20% deposit, but it can be your shortcut to home ownership.
It’s insurance that protects the lender, not you—but it can help you buy a home years earlier.
In some cases, if your loan is paid out early, your insurer may offer a partial refund of the insurance premium—depending on your LMI policy.
⚠️ Disclaimer: This article provides general information and is not financial advice. Speak with a licensed adviser or broker to assess your specific circumstances.
🟩 Are you Team Buy Now with LMI?
🟦 Or Team Wait and Save More?
📣 Tag a mate who’s still saving for their deposit—you might just save them $100K.
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