Lender’s Mortgage Insurance (LMI) is a one-off insurance premium that protects the lender, not you, if you default on your home loan. It’s typically required when you borrow more than 80% of the property’s value, in other words, if you have less than a 20% deposit.

Why Do Lenders Charge LMI?

Banks see loans with smaller deposits as riskier. To reduce their risk, they take out insurance (LMI) and pass the cost onto you, the borrower. This allows lenders to offer loans to buyers with as little as 5% deposit, helping you get into the market sooner.

How Much Does LMI Cost?

LMI isn’t a fixed fee, it depends on:

• Your loan amount

• The size of your deposit

• Whether you're a first home buyer

• Your lender’s policy

💡 Example: On a $700,000 home with a 10% deposit, LMI could cost around $15,000–$20,000. It can usually be added to your loan so you don’t pay it upfront.

Can You Avoid Paying LMI?

Yes, here’s how:

• Save a 20% deposit

• Use the First Home Guarantee (only 5% deposit needed, no LMI)

• Ask a family member to be a guarantor

• Choose lenders with low-LMI promotions (ask us to compare)

Is LMI Worth It?

For many first home buyers, LMI is the price of getting in sooner. While it adds to your loan, property prices may rise faster than you can save a 20% deposit.

✔️ At Personalised Finance, we help you understand your options, calculate your LMI costs, and look at ways to avoid or reduce it.

Let’s Make LMI Simple

Want to know your LMI cost or if you can avoid it? Chat with Hendy today and we’ll work out the smartest path to your first home.