See Lender's Mortgage Insurance
Lenders Mortgage Insurance. When your deposit is under 20% of the purchase price, most banks insure the mortgage with an insurance company. All lenders either insure the mortgage and charge an LMI premium or alternatively take on the risk themselves and charge a 'Low Equity Fee'. The fees are calculated on a sliding scale, with the lower your deposit, the higher the LMI fee. Fees typically range between 0.5% and 1.5% of the loan amount. The premium is a one-off fee, and can usually be added to the loan amount.
Lenders Mortgage Insurance. A policy that protects lenders (not the borrower) against some or most of the losses that can occur when a borrower defaults on a mortgage loan; mortgage insurance is required primarily for borrowers with a down payment of less than 20% of the home's purchase price.
Lender’s Mortgage Insurance. This covers the lender’s risk if a borrower defaults on their home loan and the lender has to sell the property securing the loan for less than what is owed on the loan. LMI is payable in full at the start of a mortgage, and is calculated based upon the loan value and the LVR.
Lenders Mortgage Insurance. Insurance taken out by the lender to protect itself from default by the borrower. Generally required for home loans with a Loan to Value Ratio (LVR) above 80%.
See Lenders Mortgage Insurance.
Lenders mortgage insurance aka LMI. When the loan to value ratio is greater than 80% LMI is usually required by the lender. This protects the lender if the borrower defaults. The LMI insurer will then seek to recover the funds of the defaulter, it does not insure the borrower against default.
Lenders Mortgage Insurance. Some lenders may provide up to 95% of funds for a loan if you agree to take out mortgage insurance. This figure is a one off payment usually made at the time of settlement. The figure is not easy to calculate being based on variables such as the loan amount, the value of your property and the exact LVR (i.e. the figure between 80% & 95%). This payment allows the lender to recoup the unpaid principal in the event of default and the borrowers debt is transferred to the Mortgage Insurer.
Lenders Mortgage Insurance. Lenders mortgage insurance (LMI) is taken out by a lender to insure a mortgage against loss if sale of the security property does not fully clear the debt if the borrower defaults. The beneficiary of the policy is the lender, not you, the borrower. LMI usually comes into play when the borrower has less than a 20% deposit, however, with all securitised loans, sold mostly by the mortgage originators and building societies, all loans are insured. The borrower is charged a once only premium based on the loan to value ratio. Many people still believe the LMI covers them for default through unemployment etc, but this is not the case. There are insurance policies to cover loan repayments and many people in occupations without sick pay entitlements etc should consider taking out this type of protection.
LENDERS MORTGAGE INSURANCE. Insurance written by an independent mortgage insurance company protecting the mortgage lender against loss incurred by a mortgage default. Usually required for loans with an LVR of 80.01% or higher. (see press release article)