The monthly LMI premium is a feature that allows you to pay the cost of the LMI fee on a monthly basis, as an alternative to the one-time cost of the initial LMI Premium, and it means that you don't have to save this additional amount before buying a home. Genworth's Monthly Premium LMI is the first monthly LMI product in Australia. Australians now have the option of paying monthly mortgage insurance (LMI) premiums from lenders instead of paying a lump sum. Let's discuss if this is the right choice for you and discuss other possible ways to save on LMI.
Pay your LMI premium in monthly installments over time, rather than as a down payment or capitalizing on your home loan. The LMI premium is a single, non-refundable fee that is paid at the time the loan is liquidated. For most lenders, the LMI fee can be included in the loan amount. If the LMI is added to the amount of the mortgage loan, the borrower will pay interest on the total loan and increase the minimum monthly repayments on the loan.
The LMI provider charges us for the LMI as a one-time cost. We transfer this cost to you as an LMI fee and nothing more. The LMI fee is generally added to the amount you borrow and is paid at the time of withdrawal. In some cases, you may be able to pay this amount in advance with your own funds; contact us for more information.
The LMI can represent an important part of your mortgage loan, and if you need to absorb this cost in the loan, you may need to evaluate your target budgets for buying your home. The cost of the LMI may vary depending on the percentage of the value of the property borrowed and the amount of the loan. Instead of paying the LMI in advance, you can borrow sooner and avoid paying a lump sum if you opt for the capitalization of the LMI and the monthly LMI. When more than 80% of the value of a property is borrowed, it is generally a condition of the loan that the borrower pays mortgage insurance (LMI) from lenders.
When applying for a mortgage loan with a deposit less than 20% of the purchase price of the property, lenders will generally require you to take out mortgage insurance (LMI) from the lender. For each new loan, the lender will analyze the relationship between the loan and the value and will generally be required to pay the LMI if your LVR is considered to be high-risk. For these reasons, an exact LMI cost cannot be given until a property and lender have been selected, and it could be a fixed rate of up to thousands of dollars. With the LMI in place, some lenders will allow you to borrow up to 95% of the purchase price of your home.
The LMI is calculated as a percentage of the loan amount and your LMI will vary depending on your loan-to-value ratio (LVR) and the amount of money you want to borrow. However, for certain professions, up to 90% can be exempted from the LMI for LVRs and is evaluated on an individual basis. Lenders who waive the LMI in favor of their own risk commission (also called reduced capital commission, REF or low deposit premium, LDP) are able to maintain the lending process in-house through their own policies. If you meet all the other loan criteria, the LMI is a way to buy your home sooner without having the 20% deposit that lenders normally require.
Your guarantor can help by providing additional security that reduces the LVR to 80% and thus allows you to avoid paying the LMI.