Mortgage Insurance

Lender’s Mortgage Insurance (LMI) premium generally applies when you are borrowing over 80% of the value of your property. Although LMI is paid by the borrower, lenders mortgage insurance is to protect the lender in the event the borrower is unable to repay the loan and the sale of the property does not cover the outstanding loan balance and costs.

Hence by using Lenders Mortgage Insurance, Lenders are able to lend over 80% of the value of the property, thereby opening options for borrowers with low deposit to enter into the property market. Some lenders may require a borrower to pay a lenders mortgage insurance premium at a nonstandard loan to value ratio (LVR) for example some lenders insure their funds when the LVR is over 90% and some lenders may insure the mortgage on LVR over 70%.

All securitized lenders generally have to obtain lenders mortgage insurance for any LVR. But the borrower may have to pay the premium only if the LVR is over 80%.Lenders Mortgage Insurance premium is calculated based on how much a customer wishes to borrow versus the current market valuation of the property also know as Loan to Value Ratio (LVR).Mortgage insurance.