The most obvious benefit of paying LMI upfront is that you’re able to get into a home sooner than you would otherwise.When home prices are rising, they are often moving at a faster pace than many people can save. That means you’re getting further and further behind. The sooner you’re able to get into the market, the quicker you’ll stop losing the battle against rising home prices.

When using LMI you can potentially afford to purchase a better-quality home in a better location, compared to putting down a 20 per cent deposit.

The biggest issue for most people who are looking at LMI is the cost. LMI will vary depending on the size of your mortgage, the value of the property and the location. Typically, LMI costs can run into tens of thousands of dollars. While there is an upfront cost, you have to weigh up those costs against sitting on the side-lines and potentially paying a higher price for your home.

By putting down a smaller deposit, you’re going to have a larger loan. Lenders will assess you based on your ability to service the debt, however, when you use LMI, you’ll be taking on a higher level of debt. And because you have less equity tied up in the property, should property values move against you, there is more risk.