What is Lenders Mortgage Insurance and How Does It Benefit Me?
The mortgage lending industry in Australia has seen several changes over the last decade. Lenders, especially big banks, remain conservative in their lending practices. However, alternatives to some rules are available, such as lender’s mortgage insurance.
For several decades, homebuyers without a 20% deposit couldn’t procure financing to purchase a home. Now, the lender’s mortgage insurance offsets the need for the deposit, which is a meaningful benefit.
Several financial insiders and real estate professionals advocate for homeownership. They argue that homeownership allows an individual to start building wealth with home equity.
A 20% deposit on $300,000 equals $60,000. If you decide to opt for the insurance, you’ll incur a cost between 0.5 and 5% of $300,000 annually. Instead of paying $60,000 upfront, LMI allows you to pay it over 30 years.
Keep in mind that the Australian Taxation Office allows homeowners to deduct some borrowing costs against their tax liability.
If you need more guidance on the numbers, our Mortgage House online home loan calculator comes in handy. It’s free and has no strings attached. Enter the inputs and check out the results. You can also try different interest rates, loan amounts, and repayment types.
Lenders Mortgage Insurance Benefits Conclusion
Lender’s mortgage insurance is an additional cost some homebuyers face. Even though it’s a cost, it’s a benefit for some. If you’re ready to become a homeowner but can’t save a 20% deposit, it’s a great alternative route. Mortgage House works with clients incurring the LMI charge. To get started, contact our loan specialists.