Lenders Mortgage Insurance | LMI
Own your own home sooner with Lenders Mortgage Insurance
Lenders Mortgage Insurance or LMI has helped over 2 million Australians get into their dream home sooner. Taking out loan with Lenders Mortgage Insurance enables a borrower to buy a new home without a large deposit.
With house prices constantly rising it is becoming increasing difficult to save a deposit. Without Lenders Mortgage Insurance banks require a minimum 20% deposit. With Lenders Mortgage Insurance your deposit can be as little as 5%.
Whilst the premiums for Lenders Mortgage Insurance Insurance may appear costly, you need to outway the benefits. By gaining a foothold in the market, you can cover yourself against rising market values.
The good news is that many lenders now capitalise LMI premiums. This means that you don't have to find the cash to pay the premium. The cost of the insurance is simply added to the amount that you borrow and added to your monthly repayments.
How Does Lenders Mortgage Insurance Work?
LMI protects lenders against loss should a borrower default on their home loan and the outstanding loan is greater than the value of the property. Should the unfortunate situation occur where the borrower can no longer meet their repayments, and the sale of the property does not cover the outstanding loan, Lenders Mortgage Insurance will cover the lender for the shortfall.
This gives many home loan lenders the confidence to lend to borrowers with a smaller deposit.
You can either pay the premium upfront, or talk to your Mortgage Broker about a lender who will capitalise (add) the premium to the amount that you borrow.
Can Lenders Mortgage Insurance be avoided?
If you can qualify for a Keystart Home Loan you will not be required to pay Lenders Mortgage Insurance which can save you thousands of dollars
Some lenders do not require Lenders Mortgage Insurance and charge a "Risk Fee" instead. The amount of the Risk Fee depends on the amount of the loan and the equity that you will have in the property.
You can avoid Lenders Mortgage Insurance by having a family member go guarantor on your behalf.
They simply provide a guarantee for 20% of the purchase price, but this needs to be secured by either a first or second mortgage over another property.
If you would like to know more Lenders Mortgage Insurance please contact us.
Copyright © Custom Finance (WA) Pty Ltd 2009 | Lenders Mortgage Insurance | Mortgage Insurance | LMI
