man holding house

Looking at the separate costs that it takes to buy a home can make it seem a lot more manageable, but it's a different story when things are added up together. Any home buyer can feel overwhelmed when they start to see the total expense of their property purchase, but it's important to have a level-headed view of everything.

There is a benefit to checking the separate costs of buying a home, and that's to see how you can individually decrease that certain expense you're paying. For instance, the amount of your Lenders Mortgage Insurance or LMI for the home loan can be scaled back a little bit.

For part two of this article, here are some additional methods to lower Lenders Mortgage Insurance:

1) Pick a Different Property or Lender

Scrapping everything so far in the homebuying process is not an easy decision to make. However, if you can't come to a compromise and the choice brings more disadvantages than advantages, it's time to consider a different lender or property.

2) Save and Increase Deposit

The second way to lower LMI on your home loan is to save up your deposit to a level where no LMI premium is needed. If you can save a deposit of 20% or more, they won't even require you to pay LMI.

In simpler terms, If you have a larger deposit, then you can get a lower LMI. This solution works out best for those who aren't in a rush during the homebuying process.

3) Apply for Substitution of Security

If you are having trouble saving up the security deposit to a level acceptable for your lender, try substitution of security or loan portability. Instead of physically saving a large security deposit, You can swap the security on your current loan from the property you’ve sold to the one you are purchasing.

If you have an existing mortgage and are looking at buying and selling at the same time you should consider security substitution or loan portability, rather than paying out the old loan.  It can be as simple as changing the security of the loan from one property to another – the loan effectively remains open. Lenders terms and conditions will apply. 

4) Explore a Shared Equity Agreement

You might be able to decrease your LMI by entering a shared equity agreement with your property seller. This one has to be done before you buy the property and negotiate directly with the seller.

One other main benefit of the shared equity agreement is potentially buying the property below market value. It can be tricky as a few parties are involved, but as long as you, the property seller and the mortgage lender work everything out, it can be advantageous for you.


Buying a home is intimidating, especially when it seems like you are getting hit from all directions by various expenses. However, working with the right people and lowering certain costs such as the LMI can truly help the average Australian homebuyer.

Looking for the best mortgage brokers? Wealthy You is an Australian Mortgage company servicing Sydney, providing many different mortgage solutions to meet your specific financial needs. Contact us now!