Primary mortgage insurance
Understand Primary Mortgage Insurance (PMI) in Australia. Discover how it works, why you pay it and how expert advice can help you navigate this home loan cost.
Primary Mortgage Insurance Explained: What You Need to Know
Learn how primary mortgage insurance (PMI) works, when it’s required and how to avoid or cancel it to reduce your home loan costs.
MORTGAGE
Understanding PMI (LMI): the basics
Lenders Mortgage Insurance (LMI) is a mandatory cost for many Australian borrowers and protects the lender if you default. It’s typically required when your Loan to Value Ratio (LVR) exceeds 80% (deposit under 20%), allowing lenders to approve higher-risk loans.
Key points:
LVR threshold: Triggered when LVR > 80%.
One-time premium: Usually paid upfront and often added to your loan (meaning interest applies).
Cost varies: Based on loan size and LVR, the smaller your deposit, the higher the premium.
Not transferable: You may pay LMI again if you refinance above 80% LVR.
A HeyNest-connected broker can calculate LMI costs across lenders and help you factor this major expense into your strategy.
Simple, Smart, Chill.
That's Heynest
Skip the paperwork. Connect with your broker online in minutes.
Digital & Fast
Your Perfect Match
We link you with the expert who understands your goals.
Tailored Options
Access the best mortgage deals, hassle-free.
How to reduce your LMI cost
While often unavoidable for buyers with small deposits, smart planning can minimise or eliminate LMI.
Strategies:
Save 20%: The most reliable way to avoid LMI.
Guarantor loan: A family member’s equity can remove the need for LMI.
Government schemes: Programs like the First Home Guarantee allow eligible buyers to avoid LMI with smaller deposits.
Increase your deposit: Even 1% more can lower the premium.
Compare lenders: LMI fees differ widely.
HeyNest brokers compare lenders, LMI providers and schemes to structure your loan for the lowest possible LMI, often saving thousands.
Stop Stressing: Why a Broker is the 'Smart, Chill' Way
HeyNest
Traditional Bank
Access to many lenders
Compares and negotiates the best market rates for you.
Dedicated, personalized guide every step of the way.
Only offers their own limited products.
Standard, often non-negotiable in-house rates.
Standardized service; often no single dedicated contact.
Is paying LMI worth it?
Whether LMI is “worth it” depends on your finances and how quickly property prices are rising in your area.
Considerations:
Faster market entry: Enter the market sooner instead of waiting years to save 20%.
High upfront cost: Premiums can range from thousands to tens of thousands.
Cost of waiting: In fast-growing markets, delaying may cost more than LMI.
Emotional/financial relief: Owning sooner can offer stability and peace of mind.
HeyNest brokers help you compare LMI costs against potential missed capital gains, ensuring your decision aligns with your long-term goals.
Simple
Smart
Chill
Heynest
Find your ideal mortgage broker and unlock tailored home loan options without the hassle.
Frequently asked questions
Is primary mortgage insurance tax-deductible in Australia?
No. LMI is generally not tax-deductible for owner-occupied homes. It may be deductible for investment properties.
Does LMI cover me if I lose my job?
No, LMI only covers the lender if you default; it offers zero protection to the borrower.
Can I avoid paying primary mortgage insurance by choosing a specific lender?
Generally, no. LMI is a risk requirement applied across nearly all Australian lenders when the deposit is less than 20%.
HeyNest operates as an aggregator of products and services offered by third-party entities, allowing users to access general information and compare available options. Results may be shown through automated prescoring criteria, which does not imply the direct provision of the service, nor does it constitute advice, intermediation, or a contractual relationship on behalf of this platform. Its function is limited to displaying information provided by collaborating entities through preliminary profile analysis tools. Suitability criteria are based on the data provided by the user, which is purely for guidance purposes and does not, in any case, represent the direct provision of the final service, nor the role of the offering party, provider, authorized intermediary, or advisor with contractual formalization capacity on behalf of the listed entities.
HeyNest does not act as a contracting party in any potential legal relationship that may be established between the user and external providers. It also does not perform representation, personalized advice, or mediation functions. The decision to contract any product or service is entirely the user's responsibility, who must carefully review and accept the terms and other binding elements defined by each providing entity before formalizing any contractual relationship. The availability, accuracy, validity, suitability, or truthfulness of the displayed information may change at any time. The inclusion of products or services on this platform does not imply any link, control, or verification by the platform owner over the terms offered by external entities. There is no direct or subsidiary assumption of responsibility for the results, conditions, or consequences arising from the contracting or use of products or services accessed by the user through this technology. To understand how this site works and the rights and responsibilities that apply to all parties, we invite you to review our legal pages.
Australia
HeyNest © 2025
Directories
Mortgage Broker City
Mortgage Broker Wagga Wagga
Home Loan Bank