If you’re taking out a mortgage in Australia, then there’s a good chance that you’ll need to pay Lenders Mortgage Insurance (LMI). This article will tell you everything you need to know about LMI, including what it is, how much it costs, and when you have to pay it. Keep reading for more information!
What is LMI?
Lenders Mortgage Insurance (LMI) is an insurance policy that protects the lender in case you default on your mortgage loan. This insurance isn’t required by law, but most lenders require it if you are borrowing more than 80% of the property value. The cost of LMI is usually between 0.5%-2.00% of the total loan amount and is usually paid upfront or added to the loan amount at settlement.
When do you need to pay LMI?
When do you need to pay for LMI? When you apply for a mortgage, your lender will examine your financial situation and decide whether or not LMI is necessary for the loan to be approved. If it’s determined that you’ll need to purchase LMI, then you’ll need to pay for it either as part of your loan settlement or upfront.
What are the benefits of LMI?
What are the benefits of LMI? LMI is a great way to protect yourself against potential financial losses in case you’re unable to make payments on your mortgage. Plus, if you do end up defaulting on your loan, the lender will be able to recover some of their lost funds with this insurance policy. Lastly, having LMI gives lenders the confidence they need to approve larger mortgages, which can help you get a better deal on your home loan.
Hopefully this article has given you an overview of what LMI is and when it might be required. If you have any more questions about this important topic in Australia, then you should talk to your lender or mortgage broker to get more specific advice. Good luck with your home loan!
