The power of 20% deposit

1️⃣ Easier Mortgage Approval 
Banks see a 20% deposit as lower risk, meaning:
Fewer restrictions on your application.
No need to prove 12+ months with your current employer (a requirement for First Home Loan with a 5% deposit).

2️⃣ No Lenders’ Mortgage Insurance (LMI)
With a 5% deposit First Home Loan, you must pay 0.5% of your loan amount as LMI.
Example: Borrowing $800,000? You’ll pay $4,000 in LMI— omg, that's lots of money!!!

3️⃣ No Low Equity Margin (LEM) or Low Equity Premium (LEP) 
Borrowing with less than 20% deposit means banks charge extra interest (LEM) ranging from 0.25% to 1.20% or extra fee (LEP) depending on the lender and your LVR.

4️⃣ Better Interest Rates & Cashback Rewards 
You qualify for special discounted rates from banks.
Many lenders offer up to 1% cashback on your loan. This can help cover your legal cost, building inspect fee or get you a beautiful new piece of furniture.

5️⃣ Easier Refinancing for Better Deals 
With 20% equity, switching to another lender for better rates or cashback is much easier.
Low-equity borrowers often struggle to refinance due to LEM/LEP fees. 

A 20% deposit isn’t just about securing a mortgage—it’s about getting the best deal, paying less interest, and keeping more money in your pocket! 

What are your thoughts? Discuss with us via our Facebook group: NZ FIRST HOME & MORTGAGE HELP | Facebook