How the removal of lenders mortgage insurance is lowering loan repayments for first-home buyers

Full transcript

Lenders mortgage insurance would sit between $20,000 to $25,000. With the new grants have come out, it's removing a huge tax. So lenders mortgage insurance is effectively a risk fee. It's an insurance policy that's taken out for the benefit of the bank. So in the event that someone was to default or something was to occur, what it basically does is it pays out the bank if that person was in negative equity.

LMI or lenders mortgage insurance, that was actually a really large upfront cost. So if we were looking at, you know, a purchase price previously of $750,000, quite often that lenders mortgage insurance would sit between $20,000 to $25,000. The thing is, is that a buyer has to come up with that amount of money upfront and that forms part of their funds to complete. So that was creating a really large barrier to entry.

So with the new grants have come out, we've now got no lenders mortgage insurance on purchases with a 5% deposit, up to $1,000,000 in Queensland and up to $950,000 in Victoria. So it's removing a huge tax that was effectively paid by buyers within the market that would really serve them no benefit. So by getting rid of that, the beauty of it is even if you have a larger deposit, a much larger amount of your money is now going into the house itself, which is lowering the loan, which also means that you've got lower repayments.

So it's a really interesting time. It's a really cool time for buyers in the market.