WHAT IS LENDER’S MORTGAGE INSURANCE?

Lender's Mortgage Insurance is a one-off, non-refundable fee that the buyer must pay to the banks if they have a deposit of less than 20% of the purchase price of the property.

This insurance protects the lender against the risk associated with the borrower's unable to meet the loan repayment requirement or if the property is sold for less than the outstanding loan balance.

It is important to understand that LMI protects the lender, not the borrower (or any guarantor), even though the lender will usually pass on the cost of LMI to the borrower.

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If you want to buy a house that’s worth $500,000, the bank will usually require you to have a deposit of $100,000 (20% of the property’s value).

If you do not have enough deposit saved, you may still be able to secure the loan with a higher Loan To Value Ratio (LVR) of more than 80% by paying LMI. The cost of LMI can be paid as a lump sum. Some lenders may offer to add it to your loan amount.

BENEFITS OF LENDER’S MORTGAGE INSURANCE

Faster Access to Loans: It enables property purchasers to access loans for their home or investment sooner even when they haven’t saved usually requiring a 20% deposit.

Unlocking Investment Opportunities: LMI can help investors access equity from their homes to invest for further investments, enhancing financial flexibility.

LMI V/S MORE SAVINGS - WHAT IS BETTER?

Every home buyer’s situation and financial goals are unique. A bigger deposit will save you from paying the LMI premium.

On the other hand, if you’ve found the property you want and believe the purchase price could rise before you save enough deposit for such a property, LMI may help you get into the market quicker.

TEAM SONI CAN HELP

✅At SONI Wealth, we have designed and executed an effective step-by-step system to help our clients make investment decisions with confidence. We have helped our clients to venture into the property market with minimal savings, starting from as low as $20,000.

If you are keen to learn more, reach out to us today!