If you're buying a home with less than 20% deposit, chances are you'll hear about Lender’s Mortgage Insurance (LMI). It’s a common cost for many Australian borrowers — but one that isn’t always well understood.
At Gardian Finance in Mackay, we believe informed borrowers make better decisions. Here’s what you need to know about LMI.
🏦 What Is LMI?
LMI is an insurance policy that protects the lender, not you, in case you can’t repay your home loan. It’s usually required when your deposit is less than 20% of the property’s value — meaning you’re borrowing more than 80% (often called a high loan-to-value ratio or LVR).
For example, if you're buying a $600,000 home with a $60,000 deposit (10%), you may be required to pay LMI.
💰 How Much Does LMI Cost?
LMI isn’t a flat fee — it varies depending on:
The cost can range from a few thousand dollars to over $20,000. Most borrowers choose to add it to their home loan (called "capitalising" LMI), but this means you'll also pay interest on it over time.
🤔 Can You Avoid Paying LMI?
Yes — and here’s how some buyers do it:
1. Save a 20% deposit:
The simplest way to avoid LMI is to contribute a larger deposit.
2. Use a guarantor:
Some buyers use a family guarantee (such as from parents) to eliminate or reduce the need for LMI.
3. Access LMI waivers:
Certain professions (like doctors, accountants, lawyers, and engineers) may qualify for LMI waivers through select lenders.
4. Apply for government schemes:
Programs like the First Home Guarantee allow eligible first-home buyers to purchase with as little as 5% deposit — without paying LMI.
📉 Is Paying LMI Ever Worth It?
In some cases, yes. If the property market is rising quickly or you’re ready to buy but don’t yet have 20%, paying LMI might allow you to buy sooner — and avoid being priced out later.
Our team at Gardian Finance in Mackay can help weigh up the cost of waiting vs. the cost of LMI to find the right strategy for you.
Speak to the Experts at Gardian Finance in Mackay
Whether you're a first-home buyer or upgrading your family home, understanding LMI is a key part of the finance journey. We’ll guide you through your options, calculate your LMI (if applicable), and explore ways to reduce or avoid it where possible.
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Phone: (07) 4953 2799
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Website: www.gardian.com.au📍
Address: 73 Wood St, Mackay
