What is lmi premium

LMI is not mortgage protection insurance, which a borrower might separately take out to insure themselves against the risk of not being able to meet their loan payments. LMI helps people buy homes. If you are in this situation, LMI helps make it easier for you to obtain mortgage finance. LMI does this by reducing the risk of loss to the lender if you stop paying your loan repayments. Because LMI reduces the risk for the lender, it makes them more likely to lend to you even though you do not have a substantial deposit at the outset.

The lender will pay the LMI premium to the insurer at settlement of your home purchase. This once off up-front payment covers the lender for the life of the loan which can be up to 30 years. The amount of the LMI premium depends on the lender, how much it lends to you and the size of your deposit. The lender will normally pass on the cost of this LMI premium to you as a fee. You can pay this cost to the lender at settlement or you may be able to be include the cost as a part of the loan so the cost of LMI will be added to your loan repayments over the term of your loan.

Your lender, broker or financial advisor will be able to provide details of what options are available for you. What happens if I cannot repay my loan and my home is sold? If you cannot meet your loan repayments and no other resolution is found, your property may need to be sold to cover the outstanding loan amount. If this happens, you as the borrower are obliged to repay that outstanding amount of the loan or shortfall.

Where there is a shortfall, the LMI insurer may then ask you, the borrower, to repay this directly to them, rather than to the lender. It does not protect you as the borrower. Different lenders have different rules about when LMI is required. When you apply for a home loan, the lender will help you determine if LMI is required. They should also let you know what the approximate cost of the LMI will be. In this case, your lender may claim the shortfall from the LMI provider.

Mortgage protection insurance is designed to help you meet your mortgage repayments in the event that you become seriously ill or incapacitated and are unable to work.

The cost can also vary depending on the lender. You may also be charged stamp duty, depending on the State or Territory where the security property for your loan is located.

On the one hand, you may be keen to enter the property market because you are concerned property prices may be on the rise. On the other hand, you may be happy to wait for a year or so while you save more money for a deposit. By taking advantage of the interest-free period on her credit card, April can let her salary sit in her offset account for longer.

In doing so, she reduces the amount of interest she pays on her home loan. Get practical tips to help you in your property journey, whether you're just starting out, ready to buy, or trying to sell.

Get tips now. Repayments calculator. Borrowing power calculator. Deposit and stamp duty calculator. Understand your expenses. Get detailed property and suburb information to help you plan and be more informed when buying, selling or refinancing.

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Monthly Lender's Mortgage Insurance Pay your LMI premium in monthly instalments over time, instead of as an upfront payment or capitalised into your home loan.

LMI is payable in three ways 1. Pros - Your home loan repayment amount is based only on your loan amount as no interest is charged on the LMI premium.

Capitalisation How it works Capitalise the LMI premium into your loan, you add the entire premium to your total loan amount, and it is paid off via your ongoing home loan repayments. How do I apply for LMI? Why choose Gateway Bank?