What is lenders mortgage insurance & how does it benefit me?
There are a lot of steps to qualifying and applying for a mortgage. The first thing you will need to do is save for a deposit and budget. Not everyone has the same monthly ability to save at least a 20% deposit, which is the norm for most lenders. When a lender sees a borrower has a good credit report but not enough for a deposit, they may offer an insured low-deposit loan, doing away with the need for the old high interest second mortgages and/or super expensive personal loans.
A low deposit loan is an alternative that turns home ownership from a dream to an achievable goal. However, if you do not have enough for a 20% deposit on your dream home, the lender will require a Lender’s mortgage insurance (LMI). Truthfully, an LMI is only helpful to the lender. It is security for the lender that you will repay your loan and if you don’t for whatever reason, the lender can still use the funds provided from your lender’s mortgage insurance.
If you want to get an estimate of how much you can borrow, we offer a free online mortgage calculator that is easy to use. Just input a general interest rate and how much you want to repay monthly.
Lenders Mortgage Insurance Benefits Conclusion
Lender Mortgage Insurance is mainly for the lender to ensure they do not lose money during your mortgage. It is beneficial for the borrower when they do not have the full 20% and want to borrow above 80% of the asking price of a home.