Can LMI be Waived?
Unfortunately, Lenders Mortgage Insurance (LMI) cannot be waived. Lenders Mortgage Insurance is an additional fee that protects a lender in the case of foreclosure or a buyer not paying their scheduled loan payments. A home buyer that pays a 20% deposit on the new home will not have to pay LMI, but a buyer that pays less than a 20% deposit is required to pay LMI.
If a first-time home buyer qualifies for the First Home Loan Deposit Scheme (FHLDS) or the FHLDS New Home Guarantee, they will then be excluded from LMI. The LMI fee is a one-time charge that can be paid at once in total, lumped in with a loan, or paid every month. Without LMI home buyers may find it exceedingly difficult to find a lender for loans, especially if a buyer has less than a 20% deposit. Essentially, LMI allows a bank to feel more comfortable with lending to someone with a deposit of less than 20% and boosts a buyer’s potential for purchasing a home.
At Mortgage House, we put buyers first and assist potential homeowners with ensuring everything runs smoothly during the house buying process. If you would like to learn more about home loans we have put together a helpful checklist for potential buyers to use as a free resource.
Waived LMI Conclusion
Lenders’ Mortgage Insurance cannot be waived however if a buyer has a 20% deposit or has been approved for FHLDS, LMI is not necessary. LMI can boost a buyer’s potential for purchasing a home with a deposit lower than 20% and allows for lender protection.