What is the Lender’s Mortgage Insurance?
Lender’s Mortgage Insurance is insurance on high-risk mortgages to protect the lender in case you default on the loan. This benefits you as you are able to borrow with a lower deposit than normally would otherwise be approved for without LMI, and it benefits the banks as it reduces the risk for them, and they are able to approve a greater number of mortgages.
As a general rule, a mortgage is considered a high risk when the Loan to Value Ratio is higher than 80%.
LMI is not technically an upfront fee as it is applied directly to your home loan, but you will still need to pay for it.
So how much will I pay for LMI?
There are a number of factors that can affect the cost of LMI:
- The size of your deposit: The size of your deposit will not only affect the interest rate offered to you by your lender, but also the cost of LMI for the loan
- Whether the property is an investment property or owner-occupied:
Some lenders will offer different prices depending on the purpose of the loan - The insurer used by the lender:
LMI prices differ depending on the lender’s insurer, there are two insurers in Australia, Genworth and QBE - If you’re on part-time or full-time employment:
This can affect the lender’s perceived risk of the loan which will affect how much they will charge for LMI - The size of the loan:
The larger the loan, the more it costs to ensure
Given the amounts can change so dramatically get in touch with us. and we will provide you with an understanding of how much you have to pay,
Disclaimer: The information contained on this web site is general in nature and does not take into account your personal financial situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.
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