If you are taking out a financing option that is worth more than 80% of the property’s value it is important that you look at the price you will have to pay for Lenders Mortgage Insurance and factor it into your financial plan.
Lenders Mortgage Insurance helps put a layer of protection in place for the lender in the event that the borrower (you) is unable to meet the repayments on the loan and the result of the property being sold does not completely cover the remaining costs and balance on the loan.
Even though Lenders Mortgage Insurance is put in place to protect the lender, it is paid for by the borrower. Depending on what type of product and rates you receive on your loan, Lenders Mortgage Insurance can be expensive but it can also allow some borrowers to secure a loan with a lower deposit.
There are different insurance types (such as low-doc loans or first home buyer loans) as well as a wide variety of factors that are used to calculate your Lenders Mortgage Insurance rate such as:
- The amount of money you are borrowing for your home finance loan.
- The type of Lenders Mortgage Insurance you are receiving.
- The loan’s LVR (loan to value ratio).
By factoring in all of these costs, working with Better Mortgage Solutions as your Mortgage Broker can help you determine how much Lenders Mortgage Insurance you might need to pay.
If you are unsure about the implications of LMI, get in touch with us today. We will help you determine the type of loan you need that balances the cost of your deposit, the rate of your loan, and the price you might be paying for LMI.