Can You Add LMI to Your Loan? Capitalised LMI Cost Over 30 Years

How capitalised LMI works in Australia, including repayment impact, extra interest and when paying upfront may be better.

RERealEstateCalc Editorial · Property & Finance Research

25 May 20261 min read

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Capitalised LMI means borrowing the premium

Many borrowers do not pay LMI in cash. Instead, the lender adds the premium to the loan balance. This is called capitalising LMI.

It reduces the cash needed at settlement, but it increases the amount you owe and the interest charged over time.

Why the 30-year cost is bigger

If a $15,000 LMI premium is capitalised into a 30-year loan, the true cost is not just $15,000. You also pay interest on that premium for as long as it remains part of the loan balance.

Use the LMI Calculator to compare upfront and capitalised payment methods, then check repayment impact in the Mortgage Repayment Calculator.

What to watch

Capitalising LMI can lift the final LVR.
A higher final LVR can affect lender policy.
Refinancing at high LVR can trigger a new LMI premium.

Sources: ASIC Moneysmart LMI guidance. General information only.

RealEstateCalc Editorial

Property & Finance Research

The RealEstateCalc editorial team researches and writes about Australian property, finance, and tax topics. All content is fact-checked against official sources including the ATO, state revenue offices, ASIC Moneysmart, and the RBA.

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