Lenders mortgage insurance (LMI)
Lenders mortgage insurance protects the lender, not the borrower, against loss; a borrower may be required to pay a premium when borrowing above about 80% of the property's value.
Lenders mortgage insurance, explained.
The premium rises with both the LVR and the loan size and can run to tens of thousands of dollars at 95%. It is usually added to the loan, so interest is paid on it for the life of the loan unless it is repaid early.
Some professions and some lenders offer reduced or waived premiums: medical professionals with certain lenders, and buyers using a family guarantee, are the common cases. First home buyer guarantee schemes replace the insurance with a government guarantee for eligible buyers.
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The Learn section is general information about lending in Australia. It does not take account of your objectives, financial situation or needs, is not credit assistance, and is not tax, legal or financial advice. Lender policies, government schedules and regulations change; check the current position with the relevant body or with us before relying on it.
