ME Bank offers 25% off LMI for first home buyers

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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
ZERO APPLICATION FEESFEE FREE OFFSET

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

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
ZERO APPLICATION FEESFEE FREE OFFSET

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

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
FixedMore details
USE A MARKET LEADING APP TO HELP YOU PAY OFF YOUR LOAN SOONER

Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

  • Make up to $20,000 additional repayments per fixed term
  • Redraw available – lets you access any extra loan repayments you’ve made
  • Choose to rate lock for 90 days (fee applies)
USE A MARKET LEADING APP TO HELP YOU PAY OFF YOUR LOAN SOONER

Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

  • Make up to $20,000 additional repayments per fixed term
  • Redraw available – lets you access any extra loan repayments you’ve made
  • Choose to rate lock for 90 days (fee applies)
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Variable Owner Occupied, Principal and Interest (Refinance Only)(LVR <75%)

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.
REFINANCE IN MINUTES, NOT WEEKS

Variable Owner Occupied, Principal and Interest (Refinance Only)(LVR <75%)

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.

Rates correct as of January 24, 2022. 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. 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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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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