NAB-owned digital bank Ubank has introduced a home loan product that allows eligible borrowers to purchase property with just a 10% deposit without paying lenders mortgage insurance (LMI). Ordinarily, lenders require LMI when the deposit is below 20% of the property value to protect against borrower default. This product waives that requirement for qualifying applicants, potentially saving borrowers thousands of dollars in upfront costs.

What the Product Offers

Ubank’s offering is a variable-rate home loan available to both first home buyers and existing homeowners purchasing owner-occupied property. The key feature is the LMI waiver on loans with a loan-to-value ratio (LVR) of up to 90%, meaning borrowers need only a 10% deposit plus settlement costs.

According to ASIC MoneySmart, LMI typically costs between 1% and 3% of the loan amount when the deposit is below 20%, which on a A$500,000 loan can mean A$5,000 to A$15,000 in additional upfront costs (MoneySmart, 2024). Waiving this cost significantly reduces the barrier to entry for buyers who have saved a smaller deposit.

Eligibility Requirements and Conditions

Not every borrower will qualify for the LMI waiver. Ubank has set specific criteria:

  • Borrowers must meet standard serviceability requirements, demonstrating they can afford the repayments based on their income, expenses and existing debts.
  • The property must be for owner-occupation (not investment).
  • Applicants must hold or establish a Ubank transaction account and arrange for their salary to be deposited into that account.
  • The product is available on variable-rate loans only, not fixed-rate loans.
  • Standard lending criteria apply, including credit history checks and income verification.

As covered in foundational finance texts such as Principles of Finance, lenders assess risk using the loan-to-value ratio and the borrower’s repayment capacity. Ubank’s decision to waive LMI suggests the bank is managing risk through tighter serviceability standards or other internal measures rather than passing the insurance cost to the borrower.

Borrowers should confirm current eligibility criteria and product features directly with Ubank, as terms and availability can change.

How This Compares to Other Low-Deposit Options

Several paths exist for Australian borrowers with deposits below 20%:

  • Standard LMI loans: Most lenders accept deposits as low as 5% to 10% but require LMI, which adds to upfront costs.
  • The Home Guarantee Scheme: The federal government’s scheme allows eligible first home buyers to purchase with a 5% deposit (or 2% for some regional areas) without LMI, but availability is capped and eligibility is tightly defined (Housing Australia, 2024).
  • Family guarantor loans: A family member uses the equity in their property as additional security, avoiding LMI, but this places financial risk on the guarantor.

Read also: First Home Buyer Guide to Getting a Home Loan in Australia

Ubank’s product sits between standard LMI loans and government schemes. It does not have the annual allocation caps of the Home Guarantee Scheme, but it requires a banking relationship (salary into the account) and applies only to Ubank’s variable-rate offerings.

Practical Considerations

Before applying, borrowers should weigh the following:

  • Variable rate risk: The product is variable-rate only, meaning repayments will rise and fall with changes to Ubank’s interest rates, which track movements in the Reserve Bank of Australia’s cash rate. Borrowers must budget for potential rate increases.
  • Comparison rate: The advertised interest rate alone does not reflect the true cost of the loan. The comparison rate, which includes most fees and charges, provides a better basis for comparing this product to others. Verify the comparison rate and current rates with Ubank before deciding (rates as of October 2026; rates change frequently).
  • Ongoing account requirements: Maintaining salary deposits into a Ubank account is an ongoing condition. Borrowers who change banks for everyday banking may need to manage multiple accounts or risk breaching the product terms.
  • No guarantee of approval: Meeting minimum criteria does not guarantee approval. Ubank will assess each application on its merits, and stricter serviceability standards may apply to offset the LMI waiver.

Eligibility, limits, fees and product availability vary by lender and individual circumstances. Borrowers should consider obtaining personal advice from a licensed mortgage broker or lender before acting on this information.

What to Do Next

If you have saved a 10% deposit and meet standard lending criteria, compare Ubank’s offering against other low-deposit options, including any government schemes you may be eligible for. Request a detailed breakdown of the interest rate, comparison rate, fees and ongoing conditions from Ubank, and compare it with at least two other lenders. A licensed mortgage broker can help you assess whether this product suits your financial situation and goals, or whether another path (such as a guarantor loan or waiting to save a larger deposit) would be more cost-effective over the life of the loan.

General advice warning: The information in this article is general in nature only and does not consider your objectives, financial situation or needs. You should consider obtaining personal advice from a licensed mortgage broker or lender before acting on it. This is not personalised financial, lending or legal advice.