Buying a House in Australia – Lender’s Mortgage Insurance
Lenders Mortgage Insurance (LMI) is insurance that a lender (such as a bank or financial institution) takes out to insure itself against the risk of not recovering the full loan balance should you, the borrower, be unable to meet your loan payments. The cost of LMI is usually passed on to the customer as part of your regular mortgage repayments. It is important to understand LMI covers the lender, not you (or any guarantor). LMI provides consumers with a benefit as it allows lenders to provide home loans to those who otherwise meet their lending requirements but who may still be rejected for a loan because they do not have a substantial deposit. About 20 per cent of all mortgages are insured with an LMI provider.