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.
Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of August 15, 2022. View disclaimer.
Variable More details FEATURED Variable Home Loan (LVR < 70%)
Variable Home Loan (LVR < 70%)
Variable More details FEATUREDREFINANCE ONLY Variable Rate Home Loan – Refinance Only
Variable Rate Home Loan – Refinance Only
Variable More details FEATUREDAN EASY DIGITAL APPLICATION Neat Variable Home Loan (Principal and Interest) (LVR < 60%)
Neat Variable Home Loan (Principal and Interest) (LVR < 60%)
Variable More details NO ONGOING FEES Yard PAYG Home Loan (Principal and Interest) LVR ≤ 80%
Yard PAYG Home Loan (Principal and Interest) LVR ≤ 80%
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. 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. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.
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