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What is Lenders Mortgage Insurance and how can I avoid it?


Lenders Mortgage Insurance (LMI) is paid on all home loans by the lender to a third party or in-house insurance organisation. It is charged to you if the loan amount is 80% or more of the lender’s valuation of the property you are purchasing.

You can avoid paying LMI by contributing at least 20% of the property valuation. To do this, you may need to seek funds from other sources:

  • another home loan secured by another property;
  • selling assets;
  • savings;
  • gifts.

Sometime lenders will allow the LMI to be capitalised, which means it’s added onto the loan amount.

LMI is expensive but can be worthwhile – it’s the only way you can buy a property if you haven’t saved up a 20% deposit.

uno’s mortgage advisers can step you through LMI calculations, including LMI optimisation strategies. Contact us on 133 866 or via online chat.

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Helen is Head of Content at uno - the smarter, faster way to get a better home loan.

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