LMI - Lenders Mortgage Insurance
What is Lenders Mortgage Insurance - LMI
Lenders mortgage insurance only protects the lender not the borrower
This insurance protects the lender in the event that a customer defaults on their loan
Why do I need to pay LMI
If home loan lenders have a 20% deposit, this amount of deposit does not require LMI
So if the deposit is less than 20%, mortgage insurance is required to reduce the lenders risk
The general benchmark percentage is 80% loan to the value of the property purchase (banks valuation to confirm)
Who are the mortgage insurance providers
Australia has two main insurance companies and they are Genworth Financial and QBE LMI
Some lenders use different LMI providers, LMI rates can differ from lender to lender
Who has the cheapest LMI insurance then?
Unfortunately that cannot be answered easily, premiums differ depending on:
- the amount of deposit provided
- the lender
- the LMI provider
A mortgage broker can assess your loan options:
- Do all the calculations on your preferred loans
- Calculating all costs associated with the loan
This will show all fees and charges and which lender will best suit your needs and requirements
Do I qualify if I pay LMI
No, paying the mortgage insurance doesn’t qualify you
You will only be able to pay the LMI if you are approved
The bank and the mortgage insurance provider need to be satisfied independently
You may qualify for the loan from the lender but get rejected by the mortgage insurer
The mortgage insurer have policies in place to assess the level of risk and their policy requirements need to be satisfied to qualify
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