Which lender has the cheapest LMI?

Every lender had different LMI premiums! So it is critical that you shop around when choosing a lender for your no deposit loan.

Why is this so difficult? Because lenders do not publish their LMI rates on their websites! The only ways to find out their LMI premiums are to call every bank or use a mortgage broker.

Quick find:

■LMI premium rates
■LMI calculators
■How to get an LMI quote
What is LMI?
Lenders mortgage insurance (LMI) is insurance that protects the lender from losses in the event that you were to default on your loan. Genworth, PMI, WLMI, SGI and ANZ LMI are some of the common LMI providers in Australia. Note that the lender will obtain the insurance behind the scenes, however you will have the pay for the premium!

Although you receive no direct benefit from obtaining lenders mortgage insurance, the bank would not approve your loan without it. So in effect, LMI allows banks to approve loans that would otherwise be too risky and so in turn allow you to borrow more than 80% of the purchase price. LMI is a once off fee and it is charged when your loan is advanced.

Which lenders use LMI and Risk fees?
Some lenders prefer to use a third party insurer such as PMI or Genworth to insure their loans. Other lenders have their own in house insurance companies and so in effect are insuring themselves. A few select lenders simply charge you a “risk fee” and so approve your loan without LMI, but in effect have achieved the same goal under a different name. One prominent example of this is St George with their “LEF” risk fee as well as their own insurer St George Insurance (SGI).

■Who uses LMI? : ANZ, CBA, NAB, Westpac, ING, Suncorp, St George, Widebay Capricorn, AMP, Citibank and many more.
■Who has their own insurer?: ANZ, Westpac, St George and Widebay Capricorn.
■Who can charge a risk fee?: St George (LEF), ING and most non-conforming lenders.
For the purposes of this guide we will call all of the above types of insurance “LMI”, even if it is in fact a risk fee. If you would like a quote for a risk fee or LEF loan then please contact us.

What determines the LMI premium?
The LMI premium is calculated based on the loan amount, LVR (Loan to value ratio), LMI product type (e.g. First home buyer, non genuine savings, low doc, 100% loan etc) and the lender. Did you know that even though Genworth and PMI deal with most lenders, they have different pricing for different lenders?

Hint: If you borrow less than $300,000 your LMI will be incredibly cheap. If you borrow just over $300,000 then your LMI may increase by several thousand dollars. The same leap occurs when you borrow more than $500,000. This is because lenders have different premium rates depending on if your loan is less than $300,000, less than $500,000 or more than $500,000.

LMI premium rates
The below LMI table is an example only and does not include your state governments stamp duty, if applicable (usually 10% of the premium). Please refer to us for a quote specific to your situation.

First Home Buyer – 100% Loan LMI

■Less than $300,000: 2.02% to 2.85% of the loan amount.
■$300,000 to $500,000: 2.61% to 3.71% of the loan amount.
■Greater than $500,000: 3.33% to 3.42% of the loan amount
2nd Home Buyer – 100% Loan LMI

■Less than $300,000: 2.02% to 2.85% of the loan amount.
■$300,000 to $500,000: 2.61% to 3.71% of the loan amount.
■Greater than $500,000: 3.33% to 3.42% of the loan amount.
Investor / Investment – 100% Loan LMI

■Less than $300,000: 2.50% to 2.56% of the loan amount.
■$300,000 to $500,000: 2.99% to 3.34% of the loan amount.
■Greater than $500,000: 3.55% of the loan amount.
Quick start no LMI loans – 100% Loan without LMI

■Less than $300,000: No LMI is payable.
■$300,000 to $500,000: No LMI is payable.
■Greater than $500,000: No LMI is payable.
Notes: LMI premiums are subject to change, please contact us for an up to date quote for your situation. The above premiums do not include state stamp duty. Quick start loans do not have any LMI payable however have a higher interest rate to compensate and so are appropriate for anyone who has very little money to contribute but has a high income. A range of different lenders risk fees, LEF fees and LMI premiums were compared to create this LMI table for you. No deposit construction loans have the same LMI premiums as normal loans.

Important: You may have noticed a significant difference between the different premiums charged by different lenders! For example the difference between the best and worst is $4,400 for a $400,000 No Deposit loan! Please shop around to make sure that your loan is competitive.

LMI calculators
Several lenders have issued calculators that allow their bank managers and mortgage brokers to accurately calculate an LMI premium for you. These are not available to the general public as they are quite complex. We have developed a simplified online LMI calculator for use by the general public. If you would like us to use our LMI calculators to work out your LMI premium for you then please contact us.

Get an LMI quote
We have the LMI premium rates and tables for most major lenders in Australia. If you aren’t sure which lender offers the cheapest LMI for no deposit home loans then please enquire online or contact us for a free quote.