Lenders Mortgage Insurance - What You Need To Know
Getting a home loan takes into consideration a number of different factors for every individual who applies - but most of it hinges on your initial deposit.
Lenders tend to be more favourable towards borrowers with a larger deposit and constant incomes than those with less to anchor their investment.
Those borrowing more than 80 per cent of their property value are required to take out Lenders Mortgage Insurance (LMI).
LMI must be paid by the buyer, but protects the lender should the borrower be unable to repay their loan and the resulting sale of the property does not cover the outstanding loan balance.
However, the advantage to borrowers is because of LMI, most lenders are willing to consider home loan applications with deposits as low as five per cent.
When figuring out the overall cost of your investment, the cost of LMI should be considered and factored into your financial standing.
The LMI premium is generally calculated by how much you want to borrow and the loan type and the loan-to-value ratio.
Seeking expert advice from a mortgage broker can help to explain LMI and your relationship with it further.
To get more detailed information on your situation, talk to a Loan Market mortgage broker today.