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What is Lenders Mortgage Insurance (LMI)?

Lenders' Mortgage Insurance is insurance that protects the lender from financial loss if you’re not able to make your repayments and default on the loan.

You’ll need to pay LMI if you borrow more than 80% of a property’s value (i.e. if you have less than a 20% deposit).

Factors that affect how much LMI include:

  • The size of the loan - the bigger your loan, the higher the 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 owner occupiers
  • Your employment status – how much you earn and whether your work is full time or casual
  • The insurer - premiums differ between insurers

LMI can cost you thousands of dollars, however there are ways to avoid paying LMI or reducing how much you pay including:

  • Ensuring your deposit is 20% or as large a deposit as possible to lower the LMI premium
  • Having a guarantor on your loan (Tiimely Own home loans don't offer guarantor loans, however our brokers can assist you in finding a suitable guarantor loan)
  • Applying for the Home Guarantee Scheme (HGS), eligible first-home buyers to borrow up to 95% of the property value without paying LMI

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Legal information about our rates
Our home loans are subject to credit criteria and eligibility requirements. Home loan interest rates are for new customers only and can change. Our comparison rates are based on a $150,000 loan amount over a 25 year term. They factor in fees associated with applying for the loan; ongoing fees and fees associated with leaving the loan. Our fixed loans roll to a variable principal and interest rate at the end of the fixed term. If the interest only period is not specified, the comparison rate is calculated on a one year period. WARNING: The comparison rates are true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

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At Tiimely Home we are not financial advisers and recommend seeking independent financial and legal advice to check how the information we provide aligns with your individual circumstances.