How is LMI Calculated?

When deciding to purchase a property, buyers may want to know exactly how much a property will cost in addition to the required fees. Lenders Mortgage Insurance (LMI) ensures the protection of a lender if a borrower does not pay the scheduled loan payments or in cases that result in foreclosure. Lenders typically have their method of calculating LMI and deciding if a borrower is eligible. More information on this topic can be gathered from individual lenders upon becoming established as a client. 

LMI is calculated based on the borrower’s deposit percentage and loan amount as a percentage of the amount that was borrowed. LMI also varies depending on the Loan to Value Ratio (LVR), and the individual lender’s policies. Our Stamp Duty Mortgage Calculator is a helpful tool that allows potential buyers to check the pricing of the Stamp Duty governmental fee required to get a property transferred to a new buyer’s name. 

LMI can be paid by an upfront one-time payment (https://www.helia.com.au/products/tools/lmi-fee-estimator), or be rolled into the loan and paid off over time depending on individual lenders. A home buyer with a 20% deposit will be exempt from paying for LMI, as well as first-time buyers who qualify for the First Home Loan Deposit Scheme (FHLDS).

LMI Calculation Conclusion

LMI is calculated differently depending on individual lenders. At Mortgage House, we are prepared to assist potential buyers with the complicated home buying process and have helpful calculator tools available on our website to further assist potential buyers.