In this example, on top of $2650 LMI, you will need to pay about $1000 extra stamp duty as well. Suddenly the 21K extra fund is reduced to about 17K.
Unless you have good cash flow coming in, I would stick to 80% (or less) LVR. Having said that, risk profile for each person is different.
Yep, the issue here is not cashflow. We needed that 21k and that LMI was added to the loan. (I reckon there is no stamp duty on the mortgage in WA) So we paid 2.65k for 23.65k funds. Had we taken a personal loan at 16%, we will pay 10% more than mortgage rate and the LMI amount will be paid to bank as interest in 14 months.
I am not suggesting to everyone go for LMI. It works well at times, so we shouldn't just shut down that path. In the example above, we made instant equity of at least 25k. So the LMI we paid has paid for it straight away!