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.
Insurance taken out to protect the lender against losses on the loan, in case you default - it does not protect or cover the borrower. The cost of Lenders Mortgage insurance is paid by the borrower.
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%.
(LMI) Most lenders will require Lenders Mortgage Insurance if you exceed 80% LVR. This insures the lender - not you - in case you default on the loan.
When the LVR is greater than 80% LMI is usually required. This is to protect the lender in the case of a default from the borrower, it does not release the liability from the borrower where recourse will be sought from the lenders mortgage insurer. LIM can be up to 2% of the loan amount, generally the premium is reduced with a lower LVR.
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 (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.
this is an insurance policy taken out by the lender which protects the lender. In instances where you borrow over 80% of the value of the property, the lender will generally pass the cost of this insurance to the borrower. The insurance is for default purposes only. If the loan defaults there may be a shortfall between the amount recouped from the sale of the property & the amount owing to the lender. The mortgage insurance in most cases will pay the difference.
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)
Lenders Mortgage Insurance (LMI), also known as Private Mortgage Insurance (PMI), is insurance payable to a lender when taking out a mortgage. It is an insurance in the case that the mortgagor is not able to repay the loan, and the lender is not able to recover its costs after foreclosing the loan and selling the mortgaged property. The annual cost of PMI varies between 0.19% and 0.9% of the total loan value, depending on the loan term, loan type and proportion of the total home value that is financed.