Definitions for "Lenders mortgage insurance"
Keywords:  lmi, lvr, recoup, default, lim
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.
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.
Insurance taken out by the lender to protect against the borrower defaulting.