Can’t get your 20% deposit? LMI is the answer!

Saving a 20% house deposit is tough especially when median house prices continue to skyrocket.

But there is a way to speed up the deposit-saving process by using Lenders Mortgage Insurance (LMI).

What is LMI?

LMI is insurance you can take out when loaning money from a financial institution.  4insurance

It protects the lender if you experience financial hardship and have to sell your home.

It pretty much guarantees they will get their money back if a property needs to be sold and there’s a shortfall in repaying the loan (for example, the market suddenly moves and your property price drops).

LMI can be incorporated into your home loan and paid monthly, alongside your repayments.

How can LMI help me get a home faster?

While LMI is an added expense when taking out a loan, it can potentially help you get into the property market earlier – without having to save the full 20% deposit.

The reason?

Paying LMI means lenders are often willing to reduce the amount of initial deposit required.

For some people, saving 5% of the property’s purchase price is a challenge in itself.  


Trying save the remaining 15% may take five or more years.

During this time, property prices rise and their dream home is no longer within reach.

Paying LMI upfront means these people can get a loan with a lesser saved deposit and in many cases, it works out to be more cost effective than waiting until they have a full 20% deposit.

It can be even more cost effective if you are renting.

Is LMI the right option for me?

It may be, but then again, it may not.

The best way to understand if using LMI in this way benefits you is to speak with a mortgage broker.

They have the right tools to help you make the correct decision.

If you’d like some help in this area, free feel to contact us for a no-obligation chat.


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Sean Herman


Sean Herman is the Managing Director of Professional Partners, a boutique Mortgage Broking firm which he established alongside his business partner over 13 years ago, he’s a Charted Accountant and has over 20 years finance experience.

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