ME Bank offers 25% off LMI for first home buyers

author-avatar By on September 28, 2020
ME Bank offers 25% off LMI for first home buyers

Photo by sarandy westfall on Unsplash

ME Bank has launched a special discount offer to help first home buyers enter the market.

The lender is offering eligible first home buyers access to a 25% discount on Lenders Mortgage Insurance (LMI) and has also cut variable rates by up to 182 basis points.

The rate cuts on the Flexible Home Loan, for those making Principal and Interest (P&I) repayments are: 

  • 173 basis point cut to 2.58% p.a. (2.60% p.a comparison rate) for borrowers with an 80% or less Loan to Value Ratio (LVR)
  • 182 basis point cut to 2.79% p.a. (2.81% p.a comparison rate) for borrowers with a 80-90% LVR
  • 102 basis point cut to 3.59% p.a. (3.61% p.a comparison rate) for borrowers with a 90% or higher LVR

Borrowers are required to pay LMI when they have a deposit less than 20% of the property's value they wish to purchase, and can cost thousands of dollars. 

Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval
VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
WIN YOUR HOME LOAN INTEREST FREE

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • WIN your home loan interest free and save up to $1.1 million. Refinance by 29 October. T&Cs apply.
  • Refinance Only. Fast online application, refinance in minutes, not weeks.
  • No Nano fees, Free 100% offset sub account. Mobile app. Visa debit card & instant payments.
WIN YOUR HOME LOAN INTEREST FREE

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • WIN your home loan interest free and save up to $1.1 million. Refinance by 29 October. T&Cs apply.
  • Refinance Only. Fast online application, refinance in minutes, not weeks.
  • No Nano fees, Free 100% offset sub account. Mobile app. Visa debit card & instant payments.
VariableMore details
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
VariableMore details
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
VariableMore details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services

Rates correct as of September 28, 2021. View disclaimer.

ME General Manager, Home Lending Andrew Bartolo said the offer will address housing affordability and give first home buyers a leg up when they need it most. 

“First Home Buyers told us they care most about lower LMI, lower deposit, low variable rates and no ongoing fees. We’ve delivered exactly that," Mr Bartolo said. 

“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 and reach their dream of home ownership.

“With COVID-19 impacting house prices and many government grants and incentives available, now could be an ideal time for First Home Buyers to finally get into the market.”

The offer is available to first home buyers for the purposes of buying or constructing their first residential dwelling solely for owner-occupation. 

Applicants can own or have previously owned a residential investment property and need at least a 5% deposit to qualify for both the LMI and variable rate discount. 

The ME Bank offer is valid for applications submitted from today to November 20 that settle by 26 February 2021. 

The loan comes with offset and redraw facilities and the ability to make extra repayments. 

According to the Australian Prudential Regulation Authority (APRA), 95% LVR loans make up 5% of the overall loan book in Australia, but account for 8% of all loan deferrals.

ME Bank isn't the first lender to offer discounted LMI, with St George offering LMI for just $1 to first home buyers.  

How much does LMI cost? 

According to Genworth, a borrower looking to purchase a $600,000 home with a 95% LVR would pay an estimated $25,707 in LMI. 

This would drop to $13,176 with an LVR of 90% LVR and $6,630 with an 85% LVR. 

Check out the table below for a further breakdown of potential LVR costs for various property values. 

Estimated property value 95% LVR 90% LVR 85% LVR
$200,000 $5,073 $2,718 $1,479
$400,000 $12,768 $6,912 $3,842
$600,000 $25,707 $13,176 $6,630
$800,000 $34,276 $17,568 $8,840
$1,000,000 $42,845 $22,050 $11,135

Source: Genworth LMI premium estimator. Prices including GST but excluding stamp duty. Based on a loan term up to 30 years


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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Alex joined Savings.com.au as a finance journalist in 2019. He enjoys covering in-depth economical releases and breaking down how they might affect the everyday punter. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

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