June 28, 2018
Lender Mortgage Insurance (LMI) essentially is a one off fee which is added to your total loan amount. This protects the bank against any loss that could be caused by defaults in paying off the mortgaged loan. A common misconception is thinking that the LMI you pay upfront is the same as loan protection insurance – It is not!
LMI does not protect the borrower in any way – it is to protect the bank
Loan Protection insurance is a separate voluntary insurance premium you can purchase to protect yourself in the event you are unable to repay your Mortgage.
Lender mortgage insurance is only payable if your loan to property value is higher than 80% (I.e if you have less than 20% deposit) This causes the bank to see you as a higher risk, therefore the bank has steps in place to protect themselves in the event you can not make the repayments, which is the upfront LMI fee.
If you have more questions, please feel free to contact our office anytime
07 5504 5569