What is Lenders Mortgage Insurance (LMI)?
Lenders Mortgage Insurance (LMI) is insurance that allows the banks to accept a smaller deposit from borrowers than they would normally be able to accept. LMI is typically required when the borrower requires to borrow more than 80% of the value of the property. It protects the lender (not borrower) in the event of a default on the home loan.
How does LMI help the borrower?
The benefit of LMI is that it assists in bringing home ownership within reach of many people, perhaps years earlier than if they were to save the full 20% deposit. This not only allows borrowers to get into a home sooner but allows the now home owner to begin building valuable home equity.
How do I pay for LMI?
The premium can be is paid once off and can be paid upfront but is most commonly added to the total loan amount. By adding it to the loan it means it is not a large upfront cost but a smaller, more affordable increase in the monthly repayments.
How much does it cost?
Costs vary and are determined on a case by case basis, each lender has different LMI premiums and each customer has a different situation. A LMI premium estimator from Genworth can be used estimate the costs.
Speak to us to help understand your situation as there are instances where LMI can be waived up to 85% LVR or 90% LVR for some professional occupations.
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