Lenders mortgage insurance (LMI) is a one-off, non-refundable, non-transferable premium, it’s a risk fee and another cost you must pay if you don’t have a 20% deposit for your new home.

The smaller the deposit there’s an increased risk associated with your home loan

Therefore the mortgage insurance premium fee increases or decreases in line with your deposit amount.

LMI is designed to protect the bank and not you.

You get no benefit from the insurance cover.

Your only benefit is that lenders will consider your loan application with a deposit between 5% to 20% of the purchase price.

Basically, Lenders mortgage insurance (LMI) is a risk fee for having a low deposit.

The insurance is to protect the lender from you being unable to repay your home loan.

To avoid paying LMI, you may consider:

1. Keystart – 2% Deposit non-genuine savings No LMI

2. FHBG – for 1^st home buyers – 5% Deposit genuine savings No LMI

3. FHG – The Family Home Guarentee for single parents & a 2% depost No LMI

4. Professional packages – Eligible professions where LMI is waived – 5% Deposit genuine savings

4. Certain Lenders – will charge no LMI with a 15% deposit – this though will limit the Lenders available to you