Before diving deep, let us tell you what Lenders Mortgage Insurance or LMI is.

LMI is a type of insurance created to protect the lender, which is usually your bank if you (as a borrower) fail to pay back your home loan.

LMI or Lenders Mortgage Insurance comes to play when your loan puts the bank at risk.

When do you put the bank to risk?

Here is a scenario supposedly, the home you are purchasing costs about 1 million, and you decide to borrow 855,000 from a bank as a loan, then you are borrowing more than 80% of the purchase cost of your house.

When this happens, you tend to put the bank at risk because the crisis of your finances exposes the bank to significant problems as there is no surety that you will be able to pay it all in time, especially an amount that big.

LMI allows banks to lend more than 80% of the property value without worrying about the potential risk.

Although it mostly protects the bank, it also opens the door for you to get your dream home even when you are not able to afford the value at the moment.

We know what you are thinking…

That’s great! But when and how do I pay the bank the insurance?

Well, what are we here for if not your service?

How Do You Pay The Bank?

You do not have to pay firsthand; the insurance, also called LMI premium, will be deducted from your loan funds.

Your LMI premium will be deducted at the end. Now, yes, we know the other question floating on your mind. So how do we calculate the LMI premium?

While we cannot exactly help you through it, we can give you an idea of it.

But before, you have to understand what LVR is. LVR is a percentage that we get when we compute the percentage of your borrowed amount to the property value.

Suppose the property you are borrowing for is $1,000,000, and you borrow $850,000 from the bank, then you are borrowing 85% of the property value. So in technical terms, your LVR is 85%.

Consecutively, your LMI premium will be $11,564. But this is just a basic assumption as this value can vary significantly from one LMI provider to the other.

We are sure you have learned one or two about LMI, but there is more to this concept.

Let our experts help you with it because we care.

We don’t just treat you like a number because we believe in fulfilling your dream – The dream of owning a home.