What is Lenders Mortgage Insurance?

In buying a property, you generally need 20% of the property value + costs (stamp duty transfer fees, mortgage transfer fees, registration fees, lawyer fees, council rates and water fees…)

But what if you don’t have this amount? One option is to pay a LMI premium either upfront or capitalise it into your loan, which is received by either Genworth, QBE or some lenders underwrite their own loans.

LMI does not help you, but rather the lender. Some lenders will go up to 95%LVR for an owner occupier and most go up to 90% LVR for an investment. Some lenders have an alternative called a risk fee. In any case, if you default over a long period or go bankrupt, the insurance carrier pays the lender back the loan. It only benefits the buyer by being able to get onto the property ladder sooner.

This is not to be confused with Mortgage Protection Insurance. This protects the buyer by covering the mortgage repayments or the whole loan in the event of death, total permanent disability, sickness or unemployment. Pegasus Wealth offers this product, but please speak to us first.