Mortgage Insurance
With so many things to consider when buying a property, there may be some confusion about the difference between Lenders Mortgage Insurance (LMI) and Mortgage Protection Insurance.
Let us explain…
Generally, Queenslanders requires you to contribute 20% towards the full purchase price of your property, which includes all additional costs like stamp duty and legal fees, et cetera. If your deposit is less than 20%, Queenslanders, like most other lenders, will require LMI. If all other aspects of your loan application are in order, an approval “subject to LMI” will be given. At this point the insurer will assess your eligibility for LMI.
LMI protects the Credit Union, not the borrower, against loss or default on the loan. The insurance premium is based upon the amount you need to borrow, and this once-off cost may be added to your loan or paid separately before settlement.
What it means for you
Obtaining LMI means you may be eligible for a loan to purchase the property you want sooner, without waiting to save the total deposit usually required.
You’ll just need to consider if you’re comfortable borrowing extra money to pay the premium. Realise also that, unlike Mortgage Protection Insurance which offers cover in the event of sickness, disability, unemployment, and death, LMI doesn’t provide cover for the direct benefit or protection of the borrower.
Our home loan specialists will advise you during the application process whether or not LMI is required to help make your dream become a reality.
