"I'll wait until I've saved the full 20%."
It sounds responsible. Often, it's the most expensive decision a buyer makes.
The thinking goes like this: a deposit under 20% means Lenders Mortgage Insurance… LMI is a cost… costs are bad… so the goal becomes avoiding it at all costs. → Save harder. → Wait longer. → Buy "properly."
Here's what that logic misses:
LMI is a one-off premium that protects the lender (not you), if a loan goes bad. It typically applies once you're borrowing more than 80% of a property's value, and in most cases it can be added to the loan rather than paid upfront. So far, so much like a penalty.
But the 20% you're chasing isn't a fixed number. It's 20% of a price that keeps moving. In a market that's rising, the deposit you need grows faster than most people can save… so the harder you sprint toward the finish line, the further the line moves. Two or three years of disciplined saving can leave you with a bigger pile of cash and less buying power than when you started.
That's the part I remind people that the "avoid LMI" rule never accounts for. The cost of the premium is visible. The cost of waiting is invisible; until you look back.
None of this means LMI is always the right call. Sometimes waiting genuinely is smarter, especially in a flat market or when a few months gets you across the line cleanly. And there are routes that sidestep LMI entirely: government deposit schemes, a family guarantee, certain professional waivers. Not every buyer knows they qualify for these.
The point isn't "pay LMI." It's this: LMI is a tool, not a verdict. The real question is never "how do I avoid it?" It's "what does waiting actually cost me… and is that more or less than the premium?"
That's a maths question, not a moral one. And it's worth running the numbers properly before you decide.
If you're stuck between buying now and saving longer, that's exactly the calculation worth getting clear on early.
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My Mortgage Concierge is licensed under ACL 392736 Sattout Accounting Services Pty Ltd. General information only — seek personal advice before acting.
