Can You Refinance With Less Than 20% Equity?
Yes. Lenders will refinance loans above 80% of the property value, and some go to 90% or higher, subject to lender assessment. The catch is lenders mortgage insurance. When a new loan is above 80% loan-to-value ratio (LVR), the new lender will usually require LMI, and the premium is paid by you, typically added to the loan.
How Do You Work Out Your Equity and LVR?
LVR is your loan balance divided by the property's current value. Equity is the remainder.
- Property value $900,000, loan $765,000: LVR is 85%, equity is 15%.
- Property value $900,000, loan $720,000: LVR is 80%, equity is 20%.
The value that counts is the new lender's valuation, not a purchase price from years ago or an online estimate. The equity calculator gives a quick starting figure.
Do You Have to Pay LMI Again When Refinancing?
Usually yes, if the new loan is above 80% LVR. LMI protects the lender, not you, and the policy you paid for at purchase belongs to your original lender. It does not move with you. A new lender needs its own cover, which means a new premium. In limited cases a partial refund of the original premium may be available if the loan is closed early, but that depends on the insurer's terms and should not be relied on.
When a client tells me they have about 15% equity, the first thing I do is order valuations, often with more than one lender, before any application. Sydney values move and I regularly see a property come in higher than the owner expected, which turns an 85% refinance with LMI into an 80% refinance without it. If the valuation does not get there, we talk about repricing where you are instead.
When Is Refinancing Above 80% LVR Still Worth It?
- The rate saving is large enough to recover the LMI premium and switching costs within a reasonable period. This needs to be calculated on your figures, not assumed.
- You are consolidating higher-rate debts and the overall monthly commitment falls meaningfully (see debt consolidation).
- You qualify for an LMI waiver. Some lenders waive LMI up to 90% LVR for eligible professionals such as doctors, lawyers and accountants, subject to lender assessment. See LMI waivers for professionals.
- Your current lender or loan no longer suits you for reasons beyond rate.
What Are the Alternatives If You Have Less Than 20% Equity?
Reprice with your current lender
A rate reduction on your existing loan involves no new LMI, no valuation and no application. It is nearly always the first step. See repricing vs refinancing.
Get an up-to-date valuation
If your property has risen in value, or you have renovated, your LVR may already be at or below 80%. Lender valuations for refinances are often free.
Pay the balance down to 80%
If you are close, extra repayments or savings applied to the loan can bring the LVR to 80% and remove LMI from the picture.
Wait and review
Regular repayments reduce the balance over time. We can diarise a review for when the numbers are likely to work.
How Much Is LMI on a Refinance?
The premium depends on the loan amount, the LVR band and the insurer, and it rises steeply as LVR increases. It can range from a few thousand dollars just above 80% to considerably more at 90% or higher on a large loan. We obtain the exact premium for your scenario before recommending anything, and you can estimate it with the LMI calculator.
Does a Low Valuation Change the Answer?
It can. A valuation that comes in under expectations raises your LVR and can push a planned 80% refinance into LMI territory. There are several ways to respond, covered in low valuation on a refinance.
General information only. It does not take your objectives, financial situation or needs into account. All lending is subject to lender assessment and approval. Fees and figures are typical ranges at 14 November 2026 and can change. Lend & Loan, Australian Credit Licence 511092.
