Lender Mortgage Insurance (LMI)

Generally Lender Mortgage Insurance is taken out by the lenders to protect themselves if the LVR (loan to value ratio) exceeds 80%. This type of insurance protects the lender in case the borrower defaults on the loan and the lender will not be able to recover their money after selling off the security.

Usually the insurers place various conditions on applications like income thresholds, employment length, and proof of deposit from steady savings in a bank account etc. Sometimes they restrict maximum lending based on the location of the security.

As experienced brokers we know about all the evaluation criteria used by the insurers and can prepare your application for the most favourable outcome.

Tips to avoid LMI

The best way to avoid LMI is to save up to 20% or more of the value of the property. But for many buyers this might take a long time and they need other options. In those cases most lenders accept security from a guarantor which will lower the total LVR to 80% enabling them to approve the loan.

Discuss your options with us

We welcome any potential buyer to have an obligation free discussion with us regarding your queries about home loans. Our friendly broker will do a quick assessment of your situation and give you suggestions regarding the size of the deposit and implications on LMI.