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.
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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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* Three year fixed rate, owner occupier, P&I loan with a maximum LVR of 95% and a loan amount >$150,000. Lender rates and products may change. We cannot suggest you remain in or switch to any loan until we complete our assessment. Fees and charges apply. ^ WARNING: This comparison rate is 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. The comparison rate is calculated on the basis of a loan of $150,000 over a term of 25 years. ± All loan applications are subject to uno assessment and lender approval. uno does not guarantee that it will be able to find a customer a better loan than the one they currently have or to save them money.