If you’re planning to buy a home in Australia, you might have heard about Lenders Mortgage Insurance (LMI) — but what exactly is it, and how could it affect your loan?
What is LMI?
LMI is insurance that protects the lender if you’re unable to repay your home loan. It’s usually required when your deposit is less than 20% of the property’s purchase price.
How does LMI impact you?
It’s usually a one-off cost paid at settlement or added to your loan amount.
It can be quite costly, depending on your loan size and deposit.
LMI does NOT protect you; it protects the lender.
Why does LMI exist?
Because smaller deposits carry higher risk for lenders, LMI helps them reduce that risk so they can approve loans with deposits under 20%.
Can you avoid LMI?
Save a deposit of 20% or more (including eligible grants or gifts).
We can also look at LMI waiver options offered by some lenders, especially for eligible professionals or first home buyers — but it’s important to review the criteria and terms carefully