Why wait? 5 reasons to buy a home now with Lenders Mortgage Insurance
If you're looking to buy your first home or investment property, LMI could help you get there sooner.
Sponsored by Helia. As a leading provider of Lenders Mortgage Insurance (LMI), Helia makes it easier and faster for home buyers to purchase property. T&Cs apply.
Between growing house prices and the rising cost of living, it could take years to save a 20% deposit for your first home or investment property.
But with Lenders Mortgage Insurance (LMI), you don't need to miss out. By helping you get into the property market with a smaller deposit, you could say goodbye to renting and hello to your first home or investment property (much) sooner.
👋 Hey there! We've partnered with Helia for this article, for this article, so we'll be using its information as an example throughout this article. However, you should always look at a number of options and choose the one that's right for your needs. It is also important to know that LMI is protection for your lender, not for you. LMI doesn't cover you if you miss repayments due to illness or job loss.
1. Buy with as little as a 5% deposit
According to the latest Helia Home Buyer Sentiment Report, it now takes a couple with a median wage 14 years to save a 20% deposit for a house in Sydney1.
That's a long time to be saving while also paying rent towards someone else's property and financial security, rather than your own.
Instead of having to save up a large deposit for years, LMI could help you to bridge this deposit gap and borrow with a deposit of just 5% (not including additional upfront costs like stamp duty), subject to satisfying your lender's loan eligibility requirements.
This means you could purchase a home now, rather than delaying and potentially missing out while you try and save a full 20% deposit.
LMI could also be a handy option if you're looking to purchase an investment property. For first-time investors or rentvestors with a smaller deposit, it could help get a foot in the door.
Once you've purchased a property, you could start building equity through your investment property towards your dream home and future.
2. Increase your borrowing power
When you're buying a first home, the temptation can be to opt for a cheaper or slightly too-small option.
But it could cost you significant time and money if you need to move into something bigger a few years later.
Opting to use LMI could allow you to increase your budget and the scope of properties you're looking at.
Watch the video below and see how first home buyers Mitch and Amelia used LMI to boost their borrowing power and purchase a home with a backyard, rather than an apartment.
After hearing about LMI from their mortgage broker, Mitch and Amelia discovered that they didn't need to keep delaying and saving for the right house.
Instead, they could use LMI and purchase a house now that would fit their growing family for years to come.
3. Start building equity
Owning your own home means you don't have to juggle your rent costs while saving.
You could also grow equity in your property as you pay off your home loan. LMI could help you start building equity sooner by getting into the market now rather than continue renting.
By purchasing now, you could potentially take advantage of rising property values and watch your money work for you as your property value increases.
Equity is one of the key factors that lenders look for when you're applying for future loans too. For example, you might want to renovate your place, upgrade, or purchase an investment property.
4. Cut out the need for guarantors
The Bank of Mum and Dad just isn't an option for many Australians. Finder research2 shows that only 1 in 10 Australians receive assistance from their family.
Having a guarantor for a home loan can also add complexities. Relationships can be put under strain and family members can be put at risk by providing their home as security.
Under some circumstances, using LMI instead could help you avoid this complexity and purchase a home without needing to rely on family, allowing for greater financial independence.
Family Assistance
If your family can lend you a hand with buying a home, Helia allows you to combine this with LMI for both owner-occupied and investment loans and overcome the complexities and limitations of using a guarantor. With Helia's Family Assistance LMI, home buyers receive a 15% reduction on the cost of LMI when:
- It's funded by a home buyer's family member; and
- It's paid upfront at the time of loan settlement
Helia's Family Assistance LMI can alleviate the stress that using a guarantor can cause for both the home buyer and guarantor.
5. Buy before prices rise further
Over the past 12 months leading up to June 2024, house prices increased by 8.8%3 nationally.
To try and find a cheaper property, 40% of first home buyers are now considering buying interstate as a way to get a foot in the door4.
Getting into the property market now using LMI could potentially help you avoid the risk of missing out as house prices continue to rise across the country at a rate faster than you can save in the future.
Don't wait. Find out how you could buy your first home sooner with LMI
Sponsored by Helia. As a leading provider of Lenders Mortgage Insurance (LMI), Helia makes it easier and faster for home buyers to purchase property. T&Cs apply.