What is LMI?

Lenders Mortgage Insurance

If you borrow 80% or more of a property's value you will be asked by your lender to pay lenders' mortgage insurance (LMI). You won't have to shop around for LMI: your lender will arrange it, and you can choose to pay the premium as a lump sum or you may be able to add it to the loan (known as 'capitalising' the cost).

 

Importantly, LMI protects the lender – not you – if you can't keep up the repayments and the lender ultimately incurs a loss on the loan. But without LMI, many home buyers with a small deposit wouldn't be able to secure a home loan. So while it's always worth saving a decent deposit, LMI could be the key that gets you into your own home.

 

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