Why Buying With LMI Can Get You Into the Market Faster

For many first home buyers, the dream of owning a property can feel just out of reach. The biggest hurdle is often the deposit—saving 20% of the property price to avoid paying Lenders Mortgage Insurance (LMI). But what if waiting to save that deposit means missing out on today’s market?

The truth is, paying LMI isn’t always a bad thing. In fact, it could be your ticket to getting into the property market sooner.

What is LMI?

Lenders Mortgage Insurance protects the lender if you’re unable to meet your loan repayments. While it is an extra cost added to your loan, the real benefit is that it allows buyers to purchase a home with as little as 5–10% deposit.

The Waiting Game vs. Getting In Now

Think about how long it would take you to save a 20% deposit in today’s market. For a $700,000 property, that’s $140,000 plus costs. If it takes you another 3–5 years to save that deposit, what will the market look like by then?

If property prices are rising at 5–7% per year, that same $700,000 home could be closer to $850,000–$900,000 before you’re ready to buy. In other words, saving longer can feel like swimming against the current—you’re working hard, but the goal keeps drifting further away.

Why LMI Can Be a Strategic Move

By using LMI, you may be able to buy a property now with a smaller deposit, and take advantage of potential market growth:

• Immediate Entry: Instead of waiting years, you can secure a home today.

• Capital Growth Advantage: If your property grows in value, it can offset the cost of LMI.

• Refinance Opportunity: After 6–12 months of consistent property growth (and regular repayments), you may be able to refinance your loan at under 80% Loan-to-Value Ratio (LVR), removing the LMI factor altogether and potentially accessing sharper rates.

When LMI Makes Sense

LMI may be a smart strategy if:

• You don’t have access to a guarantor.

• You don’t qualify for government first-home schemes.

• You’re in a strong financial position to service the loan, but don’t yet have the 20% deposit.

• You want to get into a suburb before it experiences another wave of growth.

Final Thoughts

Yes, LMI is an added cost. But depending on your situation, it can be the key to buying your first home sooner rather than later. With careful planning and the right advice, LMI can be an investment in your future, helping you secure a property before the market moves further out of reach.

At Ascot Mortgage, we specialise in helping first home buyers weigh up their options, including whether buying with LMI is the right move for them.

Ready to explore your options? Let’s create your Home Buying Plan today.