What is Lenders Mortgage Insurance?
Lenders Mortgage Insurance (LMI) does not protect the borrower should they be unable to make mortgage repayments. It protects the lender from any losses resulting in the sale of a property due to default by the borrower. LMI premiums are payable by the borrower when the amount borrowed is above a certain percentage, usually 80%, of the lender’s valuation of the property. Some lenders will allow you to add the LMI premium to your home loan; others require you to pay it up front.
Contrary to what many borrowers may think, Lenders Mortgage Insurance (LMI) DOES NOT protect the borrower should they be unable to make mortgage repayments. Instead, LMI protects the lender from any losses resulting in the sale of a property due to default by the borrower. LMI premiums are payable by the borrower when the amount borrowed is above a certain percentage, usually 80% of the lender’s valuation of the property. Some lenders will allow you to add the LMI premium to your home loan whilst others require you to pay it up-front.
Generally speaking, if you borrow more than 80% of the security propertys value you will need to pay Mortgage Insurance. However Honey Home Loans also have access to lenders that will lend up to 90% without mortgage insurance. Lenders Mortgage Insurance insures the lender against any loss incurred in the event the security property is sold for less than the balance of the loan. The borrower still remains legally responsible for repaying the shortfall. The insurance premium is paid by the borrower at settlement or funding, from the loan account.
If you borrow more than 80% of the security property’s value you will need to pay Mortgage Insurance. This insures the lender against any loss incurred in the event the security property is sold for less than the balance of the loan. However, the borrower still remains legally responsible for repaying the shortfall. The insurance premium is paid by the borrower at settlement or funding, from the loan account.
