LMI is designed to protect the lender should you not continue to meet your repayments.

It protects the lender against a short-fall in the event your security property needs to be sold to clear the loan balance.

LMI is only typically required where your deposit is less than 20% of the purchase price (Varies with some property types such as Rural) and is paid for by the borrower as a one-off premium payment to an insurer normally from loan proceeds.

It all boils down to:

• How quickly you can save, and your desire to be in your first home sooner: So, what is the minimum deposit for a home loan? The figure of 20% being required for a deposit is a common one, but lenders across the country will usually accept a deposit somewhere in the vicinity of 5% to 25%. Of course, if you’re comfortable to wait until you have 20% of your purchase price saved, by all means go for it – you’ll be a more attractive prospect for many lenders. However, if you’re desperate to have your own place sooner, there are options available to you.
• What your lender will do in terms of a deposit percentage: Different lenders will accept varying deposit amounts when applying for a home loan. For example, at Greater Bank, we’re able to accept deposits as low as 5%, however in situations like this, you may be required to purchase what’s known as Lender’s Mortgage Insurance (LMI). For more on LMI, see below. We also get asked a lot – “Can I get a home loan without a deposit?” and another option that may be open to would-be buyers looking to get into the market sooner is our Family Pledge Loan. In situations where a potential buyer isn’t able to save the full 20% deposit amount, they may be able to use equity in a parent or guarantor’s property to secure their own home loan. For more on our Family Pledge Loan, click here.
• Whether you’re prepared to accept LMI: LMI is basically a one-off payment you make when you’re unable to save the full 20% deposit amount for your home. It protects the lender in the event you become unable to meet your loan repayments and default on the loan at any point. The amount you pay in LMI is linked to your saved deposit amount – the smaller your deposit percentage, the larger the amount you pay in LMI. The good thing is, however, that at Greater Bank, you are able to include your LMI payment in the total cost of your loan, meaning you can repay it over time in addition to your loan repayments, and get into your new place sooner.

There are two main ways to avoid paying Lenders' Mortgage Insurance (LMI):

• Save your 20% deposit - by saving a deposit amount that represents the full 20% of your purchase price, you won't have to pay LMI.
• Consider a guarantor - If you're unable to save the full 20% deposit, applying for a guarantor loan, like our Family Pledge loan is another way to avoid LMI. This loan lets you use the equity in your guarantor's property to help you secure your loan, or a portion of it. This means that as you make repayments on your loan, you gradually pay out your guarantor, and the loan becomes fully yours.

In NSW

In NSW, eligible first home buyers no longer have to pay transfer duty on homes valued up to $800,000. For homes valued between $800,000 and $1,000,000 a concessional rate is applied.

As a first home owner, you also won’t pay any transfer duty on vacant land worth up to $350,000, while land valued between $350,000 to $450,000 attracts a concessional rate.

For more information, visit the NSW Government website.

In QLD

In Queensland, first home owners receive a concessional rate of transfer duty on homes worth up to $550,000. This concession is applied by deducting a set amount from the usual rate of transfer duty that would apply to owner/occupiers.

This means that you will effectively pay no transfer duty if you’re buying a first home worth less than $500,000, with a concessional rate applying to home valued between $500,000 and $550,000.

If you’re buying vacant land, you’ll also receive similar benefits, which mean that you’ll pay no transfer duty on land valued up to $250,000. A concessional rate applies to land valued between $250,000 and $400,000.

For more information, visit the QLD Government website.

In NSW

To qualify as a first home buyer, you must be purchasing the first home you or your spouse have owned or co-owned in Australia, although there are some exceptions.

You must also move into the property within 12 months, and live there for at least six continuous months.

You must be:

• an Australian citizen or a permanent resident of Australia
• at least 18 years old.

To find out more, visit the NSW Government website.

In QLD

• You need to be a natural person (not a company or trust) aged 18 years or older.
• You must be an Australian citizen or permanent resident (or applying with someone who is).
• You need to be a permanent resident or Australia citizen.
• You or your spouse must not have previously received a First Home Owner Grant in Australia.
• You must not have previously owned property in Australia that you lived in.
• You may still be eligible for the First Home Owner Grant in Queensland if you have owned an investment property as long as you haven’t lived in it.

In addition, you’ll need to live in your first home for at least six months within a year of becoming the owner.

To find out more, visit the QLD Government website.

An initial notification from the bank of how much they could lend you, subject to certain criteria, such as the value of the house you’re looking to buy.

We calculate the amount you could afford to borrow based on your income and known expenses and the interest rate that you would be borrowing at.

It may be useful to frame your expectations of what properties you can afford.