What is LMI (Lenders Mortgage Insurance)?
LMI is usually required if the loan required is more than 80% of the value of the property, or the loan is more than 60% of the value of the property on low documentation loans. LMI is paid by the borrower and covers the lender in the event of a loan default and where the house is sold for less than the amount owed under the mortgage. LMI premiums can usually be capitalised on top of the loan amount, however serviceability must be evident for the full loan amount.
