What is Lenders Mortgage Insurance (LMI)...

What is Lenders Mortgage Insurance (LMI)...

LMI is an insurance policy which compensates lenders or investors for losses due to the default of a mortgage loan.

As required by Australian Banks, Borrowers’ who have less than 20% deposit of the property purchase price are charged LMI by finance lenders this is an extra cost over and above the standard fees and charges related to purchasing.

The LMI premium is arranged by the lender, not the borrower, but is payable by the borrower and is calculated on a percentage of the purchase price.

As the purchaser, you need to make sure you’re happy to pay it because these rates can be expensive to cover for riskier loans.

If you would like to read more, please click here.

Source: Michael Yardney's Property Update.