Newlyweds

How LMI can get you moving

Newlyweds Tony and Amanda are battling to save a deposit for their home. And, while living with Tony's parents rent-free has helped them save, it is starting to put a real strain on their marriage.

Keen to regain their independence and start a family, they have been able to set aside a reasonable deposit, but not the 20% they'd like for a mortgage. Unwilling to outlay their salary on rent ("dead money"), Tony and Amanda speak to a mortgage broker and are excited to learn that by using Lenders Mortgage Insurance (LMI) they can secure a loan for 90% of the value of the property they hope to buy.

Using the $50,000 they have saved and their First Home Owners Grant, Tony and Amanda can comfortably pay the deposit on the property while meeting the other commitments associated with their mortgage like stamp duty, application and solicitor's fees.

Pleasingly, they learn that capitalising their LMI premium will increase their mortgage repayments by only $49 per month while letting them get into their home sooner and start to build a life together.

How Tony and Amanda crunched the numbers

LMI: the benefits

• Allowed Tony and Amanda to start enjoying wedded bliss in their dream home sooner than they thought possible
• Enabled Tony and Amanda to sidestep the rental trap and start building equity in their home earlier
• By capitalising the cost of LMI into their loan they didn't need to put aside extra to pay an up-front premium