Young Professionals

How LMI can make it happen

No debt, no worries: Lauren is 25 and has been working as a junior solicitor for three years while living at home. A diligent saver, she paid off her university HECS debt and now wants to buy her first home.

She is keen on getting an apartment close to the city that will complement her busy lifestyle and become a good long-term investment. "I want to take advantage of my increasing income and get into the property market ASAP," Lauren said.

As a young professional, she's confident her $85,000 p.a. income will increase over the next few years. However, her low level of savings (from paying off the university debt) means she is unlikely to get a loan on a $450,000 apartment, without Lenders Mortgage Insurance (LMI).

"Friends who had just purchased a property recommended I look into using LMI because it would allow me to borrow more with a smaller deposit," she said.

Lauren's lender advised that the LMI offered by Genworth Financial would enable her to purchase a city apartment with a 5% deposit. And, after speaking to a financial adviser, she was confident she could readily service a loan of $427,500 - while factoring in a buffer against interest rate rises and uncertainties.

Importantly, she can take advantage of current market prices while, hopefully, watching the equity in her new home increase through appreciating property values. "It feels wonderfully independent to know that the money I'm paying is contributing to my long term financial security and using LMI means I'll have that security sooner," said Lauren.

How Lauren crunched the numbers

LMI: the benefits

• Enabled Lauren to get into the property market in her words: "ASAP"
• Allowed her to take advantage of appreciating property values as a home owner
• Meant she could move into her home sooner than if she'd waited to save the deposit
• Provided her with a strong sense of financial independence