UBank’s new home loan to waive lenders mortgage insurance for 15% deposits

By Katherine O'Chee · · 2 min read
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Saving for a 20% deposit could take more than four years for the average Australian, but online lender UBank is offering a solution to help home buyers get into the market sooner. 

UBank today announced it will provide home loans of up to 85% loan-to-value ratio (LVR) for owner occupiers, without charging an extra cost known as Lenders Mortgage Insurance (LMI). 

LMI is usually required if you’re borrowing more than 80% of the property value, and this expense can add up to tens of thousands of dollars. 

One common way to waive LMI is to have a guarantor - usually that’s your parents or the government via its First Home Loan Deposit Scheme. But if neither option fits your situation, UBank’s new loan will give eligible borrowers with at least a 15% deposit another avenue for avoiding LMI. 

For customers with LVRs ranging from over 80% up to 85%, UBanks is introducing a variable rate of 2.49% (2.49% comparison rate*), available to owner occupiers making principal and interest repayments. Alternatively, the same borrower group could snag a three-year fixed rate of 2.05% (2.41% comparison rate*).

These are ultra low rates compared to the rest of the Mozo database, sitting 78 basis points below the variable rate average (3.27%) and 27 basis points below the three-year fixed rate average (2.32%) for 80% LVR owner occupier loans. 

How much time will UBank’s home loan save you? 

“We’re passionate about helping Australians get into their own homes but we know saving for a home deposit takes an average of 4.6 years, rising to over eight years for Sydneysiders,” UBank’s chief executive officer, Philippa Watson said. 

UBank says its 85% LVR home loan could help borrowers cut down that wait time by nearly seven months, than if they had to pay LMI upfront. 

Drawing on figures from insurance company Genworth, for an average loan of $480,000 at 85% LVR, borrowers could save about $5,000 on LMI with UBank’s new loan. 

Want to compare UBank’s offer with other deals in the market? If you’ve saved up as little as 10% of the property value, these low deposit home loans below might be of interest to you. Or head on over to Mozo’s low deposit home loans comparison hub for even more options.

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Last updated 11 September 2024 Important disclosures and comparison rate warning*

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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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