What is LMI? – Lenders Mortgage Insurance

Lenders Mortgage Insurance has helped many Australian’s purchase their home sooner when they’ve had a smaller deposit.

For example:

If you’re seeking to purchase a house that’s $400,000 and you have a deposit of $40,000, banks will normally lend you $320,000 (LVR 80%) towards the price of the property.

However, if your income supports the loan and you are eligible to take advantage of Lenders Mortgage Insurance (LMI), the banks can potentially lend you the remaining $380,000* to buy your new home.

This means with your $40,000, you can cover your 5% deposit, stamp duty, and solicitor/conveyancer fees.

Lenders Mortgage Insurance is designed to protect the banks against the risks of providing you with a home loan in the event that you default on repayments.

In other words, it’s insurance for the bank but is paid by you, the customer.

It’s a one-off cost that is added to your home loan (so you don’t need to pay LMI upfront) and it allows you to borrow more than 80% of the property value for standard home loans.

The Lenders Mortgage Insurance charge varies with each lender and is a one off cost added to your loan balance.

So if your LVR (loan to value ratio) is greater than 80%, contact us and we’ll let you know how much your LMI charge will be.

Contact us to see how Lenders’ Mortgage Insurance can benefit you, call us on 1300 421 587 or email info@bertifinancial.com.au

*Based on an LVR of 95%. Bank lending policies vary, contact Berti Financial to find out more.