What is Lenders Mortgage Insurance (LMI)?

If you’re on a homebuying journey, you may be wondering: ‘What is Lenders Mortgage Insurance (LMI)?’

Despite being a part of many home loan solutions, LMI is a term that’s still misunderstood.

Let’s take a closer look at what it is, why a lender may require it, and if it applies to you.

What is LMI?

LMI is a type of insurance that protects the lender if your home loan can’t be repaid in full and the property sale doesn’t cover the difference.

While every lender is different, LMI is usually required if your deposit is less than 20% of the property price. It’s designed to reduce their risk of losses and means they have more flexibility to offer higher loan amounts or lower interest rates.

What are the benefits of LMI?

If you’re ready to buy a home but haven’t saved a 20% deposit, LMI could help you fast-track your homeownership journey.

Although it’s an added cost, paying LMI could mean you get into the market sooner or avoid property price hikes. Your local Liberty Adviser can walk you through your options, including low deposit home loans.

Do I need to apply for LMI?

Applying for LMI is the responsibility of your lender, so you won’t need to organise this. They will check you meet the insurer’s policy criteria and handle the application when assessing your loan. This process typically happens behind the scenes.

Where can I find more information?

To learn more about Lenders Mortgage Insurance (LMI) and your lending options, reach out to your local Liberty Adviser. They will take the time to understand your unique circumstances and find a free-thinking solution to help you achieve your goals.