Lenders' Mortgage Insurance is insurance you’ll need to pay if you borrow more than 80% of a property’s value (i.e. if you have less than a 20% deposit). A 70% LMI is required for high-density units when applying for the Tiimely Own Home Loan or with certain lenders. This means you will need a deposit of at least 30% of the property's value to avoid paying LMI.
It protects the lender from financial loss if you can’t afford to meet your repayments and default on the loan.
Factors that affect how much LMI will cost you include:
The size of the loan - the bigger your loan, the higher the cost of LMI.
Your deposit amount - the smaller the deposit, the higher the cost of LMI.
The purpose of the loan – investors can pay as much as 20% more for LMI than home buyers.
Your employment status – how much you earn and whether you work full time or casual can influence the cost of LMI.
The insurer used by your lender - premiums differ between insurers.
Ways to avoid paying LMI or reducing how much you pay can include
Growing your deposit to 20% or more
Having a family member go guarantor on your loan (While we don't offer guarantor loans for Tiimely Own Home Loans, we can assist you in finding a suitable guarantor loan through our in-house broker service).
Applying for the First Home Loan Deposit Scheme and
Comparing LMI quotes from a number of lenders.
LMI can cost you thousands of dollars, so if you want to avoid paying it, the best way is to save at least a 20% deposit before applying for a loan.