Australia Mortgage Calculator 2024

What is LMI (Lenders Mortgage Insurance) in Australia?

Lenders Mortgage Insurance (LMI) is an insurance premium paid by the borrower (not the lender) when the deposit is less than 20% of the property value — that is, when the Loan-to-Value Ratio (LVR) exceeds 80%. LMI protects the lender if the borrower defaults. The cost varies by lender and LVR but typically ranges from 1% to 4% of the loan amount. LMI can often be capitalised into the loan (added to the loan balance) but this increases total interest paid. Some professions (doctors, lawyers, accountants) may be exempt from LMI up to higher LVRs through professional packages.

What is the current home loan interest rate in Australia?

Australian home loan interest rates vary by lender, loan type, and borrower profile. The Reserve Bank of Australia (RBA) sets the cash rate, which influences variable mortgage rates. As of mid-2024, variable rates for owner-occupiers with principal and interest repayments typically range from 5.8% to 7.0%, with the lowest competitive rates around 5.75%. Fixed rates for 1–3 years are similar. The big four banks (ANZ, Commonwealth, NAB, Westpac) typically have higher rates than smaller lenders and online competitors. Use comparison sites to find the best current rate for your situation.

Does paying fortnightly instead of monthly really save money?

Yes — significantly. By paying fortnightly, you make 26 half-payments per year instead of 12 full monthly payments. This is the equivalent of making 13 monthly payments per year instead of 12. On a $600,000 loan at 6.5% over 30 years, switching from monthly to fortnightly repayments can save over $90,000 in interest and cut about 4 years off the loan term. The savings compound because extra repayments reduce the principal faster, reducing the interest charged each period.

How much deposit do I need to buy a house in Australia?

Most Australian lenders require a minimum deposit of 5% of the property value, though a 20% deposit avoids LMI (Lenders Mortgage Insurance) and gives access to better interest rates. The First Home Guarantee (formerly First Home Loan Deposit Scheme) allows eligible first home buyers to purchase with a 5% deposit without paying LMI, as the government guarantees the remaining 15%. A 10% deposit strikes a balance — lower LMI than 5% LVR but still not the full 20%. Remember that stamp duty and other upfront costs must be funded separately from the deposit.