how to avoid paying LMI (Lender’s Mortgage Insurance)

How to Avoid Paying LMI (Lender’s Mortgage Insurance)

Lender's Mortgage Insurance (LMI) is often required when your loan is more than 80% of the property's purchase price. It protects lenders if the borrower can't repay the loan. But, you can avoid paying this costly insurance with a few strategies.

1. Save for a Larger Deposit

LMI is needed when the loan amount exceeds 80% of the property's value (the loan-to-value ratio, or LVR). Saving for a larger deposit lowers the LVR, reducing the lender’s risk and helping you avoid LMI.

2. Get a Guarantor

If you can't save for a 20% deposit, consider asking a close relative to be a guarantor. They can use the equity in their property to help secure your loan, and in some cases, you may not need a deposit at all.

3. Take Advantage of Professional Benefits

If you're a high-earning professional (like a lawyer, doctor, accountant, etc.), some lenders offer special benefits, including no LMI, if you earn at least $150,000 a year.

At Life Home Loans, we can help you find a loan that works for you—without the added cost of LMI. Give us a call today!

Disclaimer: This article provides general information only and does not necessarily reflect the views of the publisher or supplier. It is current as of the publication date and may change over time. Readers are advised to consult with a financial advisor, broker, or accountant before making any investment decisions, as this article is not a substitute for professional advice.