Lenders Mortgage Insurance, or LMI, is insurance that protects the lender, not you. It’s usually a one-off payment made by the borrower at the time of loan settlement.
When do you have to pay for LMI?
With a residential mortgage, as a rule of thumb, you would usually be asked to pay for LMI if your loan to valuation ratio is over 80%.
That’s when the amount of money you’re looking to borrow is more than 80% of your property’s assessed value.
Why do you have to pay for LMI?
If you don’t pay for LMI and you have less than 20% deposit, then most lenders won’t lend you the required funds.
LMI is a safety net offered to the lender in the event of a forced sale where the sale price does not fully pay out the debt.
How does LMI benefit you?
By paying LMI, the risk to the lender is reduced, and you can get your desired property without having to wait and save up for the full 20% deposit, so in a sense it’s a win-win situation!
So why not get in touch with Mortgage Choice at Newtown on 9517 1818 today.