Lenders Mortgage Insurance (LMI)
LMI is an insurance policy you may need to pay for, depending on your Loan to Value Ratio i.e. how much deposit you have saved. This is often required if your home loan deposit is less than 20% of the property’s estimated value (i.e. the LVR is greater than 80%).
Its main purpose is to protect the lender from financial loss in case the borrower can’t afford to meet their home loan repayments and there is a ‘shortfall’ (when proceeds from your house sale don’t cover outstanding repayments). This cost can vary depending on your borrowed amount and the specific lender.
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