Buying a home in Australia?
If you’re buying a property in Australia with a loan from a lender, it’s likely that you’ll need to take out Lenders Mortgage Insurance (LMI). This article will tell you everything you need to know about LMI, including what it is, how it works and whether or not you need it. Contact Loan Location now if you have any questions about LMI or want help getting the best deal on your mortgage!
What is LMI
Lenders Mortgage Insurance is a type of insurance that covers the lender if you can’t make your loan repayments. It’s designed to protect lenders against potential losses in the event of a borrower defaulting on their mortgage. When you take out LMI, it means that in the event that you are unable to keep up with your payments, the lender will be reimbursed by the insurer for any money they have lost.
Responsiibility
It’s important to note that LMI doesn’t protect borrowers from not being able to make their mortgage payments — only the lender is covered. Borrowers are still responsible for repaying the full amount of their loan (plus interest and other fees).
Do you need LMI?
Do You Need LMI? Generally speaking, lenders require borrowers to take out LMI if they are borrowing more than 80% of the property’s value. This is because lenders view higher loan-to-value ratios (LVRs) as being riskier, so they want some form of insurance in place to protect them in case the borrower defaults on their payments.
If you are able to put down a 20% deposit or more, then you may not need to take out LMI. However, this depends on your lender and the type of loan you have taken out, so it’s best to ask your lender for more information about whether or not you need LMI.
It’s also worth mentioning that taking out LMI can be expensive — depending on how much you are borrowing and the type of loan you have taken out, it can cost many thousands of dollars. That’s why it’s important to compare rates from different lenders before taking out a loan, as this could help you get the best deal on your mortgage and save money on LMI in the long run.
If you want more information about LMI or need help getting the best deal on your mortgage, contact Loan Location now! Our experienced team will be able to answer any questions you have and provide tailored advice based on your individual circumstances. We look forward to helping you find the right loan for your needs!
The Team at Loan Location are always happy to help you obtain the best absolute, Home Loan product on the market.
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