In October 2025 a lender called UBank came out with a loan product that gave people the option to purchase a home with a 10% deposit and not have to pay LMI (lenders mortgage insurance). This was not a government scheme and was open to everyone regardless of their career or situation. They simply needed to meet the lender critieria which typically comprises of proof of income, being able to service the loan and good account conduct. This loan option was available to both owner occupied and investment purchases.
We had a client who had a 10% deposit and we had to compare 2 lenders – ANZ & UBank.
The client was purchasing an investment property valued at $665,000 with a 10% deposit. We compared the pros and cons of both lenders
ANZ
- LMI Payable about $8,100
- Lower interest rate by about 0.80%
- Lower annual fees by $130 per year
- No establishment fees
UBank
- No LMI saving about $8,100 upfront
- Higher interest rate
- Higher annual fees
- High establishment fees
We ran a full cost scenario and worked out that UBank will be more cost effective only for the first 18 months. After 18 months, ANZ works out to be the cheaper option even with paying LMI. After discussion with the client it was concluded that the client would not be changing lenders within the first 2 years due to their short term goals and therefore it was actually cheaper to pay LMI for this scenario.
The moral of the story is that just because you are not paying LMI does not mean that your home loan option is cheap. Typically you will suffer with higher interest rate costs in the long term. It is always a good idea to work out the numbers accurately and compare them to your personal goals.
