If you are looking to borrow above 80% of the value of a property for a home loan or residential investment property loan or between 60 and 80% of the value of a property for a low documentation loan then Lenders Mortgage Insurance (LMI) is normally payable.
Lenders Mortgage Insurance was originally designed to protect lenders against the risk of borrower default should they provide a higher level of borrowings to a client than they would normally provide. A one off LMI premium is normally payable by the customer at initial draw-down of the loan based on the level of borrowings to be provided.
The main advantages of LMI is that borrowers can get into a home sooner as they require a much smaller deposit to purchase a property and they can borrow more funds on a loan basis normally up to a maximum of 95% of the properties value. Some lenders also allow LMI to be capitalised to their loan in certain circumstances. In most cases LMI is underwritten by an insurance company chosen by the lender who undertakes their own risk assessment of the customer when determining if they will insure the loan.
If you would like more information on Lenders Mortgage Insurance then give one of our home loan specialists a call on (07) 3349 9044 or contact us now.