ME Bank and Virgin Money slash Lenders Mortgage Insurance
As lenders compete for home loan customers amid continued rate cuts, some are offering significant reductions on Lenders Mortgage Insurance (LMI).
Today, ME Bank announced a 25% cut to LMI for first home buyers combined with discount variable rates on the ME Flexible Home Loan.
LMI is typically required on loans with a Loan to Value Ratio (LVR) below 80% (that is, when the deposit is less than 20% of the value of a property). Allowing borrowers with lower deposits to avoid this could cut thousands of dollars from the overall cost of a home loan.
“We’ve combined our lowest-ever variable rate, no ongoing fees and our fully featured home loan product with an innovative LMI discount to help first home buyers smash through the deposit hurdle,” ME general manager of home lending, Andrew Bartolo said.
To access ME's reduction and attractive new interest rates, borrowers must have a minimum 5% deposit, intend to live in the property, and start paying back the principal loan amount plus interest. Unlike many first home buyer offers, borrowers can still apply if they have previously or currently own a residential investment property.
The top 2.58% p.a. rate will be reserved for customers with a LVR under 80%. However, those with smaller deposits will still see substantial interest rate drops from ME’s current 4.31% p.a. headline offer. These start from:
- 2.79% p.a. for borrowers with an LVR between 80% and 90%
- 3.59% p.a. for those with an LVR over 90%
RELATED: St.George reduces Lenders Mortgage Insurance to just $1 for first home buyers.
Virgin Money is going one step further and making LMI $0 for eligible borrowers, whether they’re first-time buyers or upgrading to a new property.
To be eligible, home buyers must apply for a Reward Me Home Loan (OO, P&I) with a deposit of at least 15% of the property’s value. This offer also comes with discounted rates, including:
- Variable rates starting from 2.89% p.a.
- Fixed rates starting from 2.49% p.a.
Home loan customers considering Virgin Money’s offer can apply until 29 November, but must have their loan settled by 30 May next year.
At ME Bank, borrowers can apply from today until 20 November, 2020, and need to settle by 26 February, 2021.
If you want to scan more mortgage options, check out the offers below or head to Mozo’s first home loan comparison page.
First home owner loans - page last updated October 20, 2020
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