Understanding Lender’s Mortgage Insurance (LMI) and How to Avoid It
Lender’s Mortgage Insurance (LMI) is a common requirement for Australian home loans with less than a 20% deposit, adding to the cost of homeownership. This blog explores LMI, who needs it, and practical tips on avoiding it.
What is LMI and Why Do Lenders Require It?
LMI protects the lender, not the borrower, in case of default. Lenders require it on loans with a high Loan-to-Value Ratio (LVR) because of the increased risk.
Strategies to Avoid LMI
Borrowers can avoid LMI by saving a 20% deposit, using a guarantor, or participating in government schemes, like the First Home Loan Deposit Scheme (FHLDS). This section will also discuss factors influencing LMI costs, such as property value and loan amount.
Understanding the Impact of LMI on Loan Repayments
LMI adds to the cost of borrowing, either through an upfront payment or by capitalizing it into the loan, which can affect monthly payments. This blog will provide an example breakdown of these options, helping readers make informed decisions.
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