The premium can be included as part of the loan amount or paid in advance at the time of settlement. Your lender can provide you with details of the likely costs after you apply for the loan. When you refinance, your LMI may be repaid (especially if your loan amount is increasing). Your mortgage broker will help you calculate all the costs involved so that you have an accurate idea of how much money you will have to spend on buying your property.
This type of insurance covers the remaining unpaid amount of the loan if the amount recovered from the sale of the property is not enough to pay the loan in full to the lender. Both stamp duty and GST are paid in lenders' mortgage insurance and are generally included in the total quoted price of your LMI. So, it's important to remember that the lender's mortgage insurance doesn't protect you, but the lender. While most lenders tend to trust lenders' mortgage insurance if the LVR is greater than 80%, some lenders have created their own alternative (and often in-house) risk process.
Mortgage protection insurance is designed to help you pay your mortgage if you become seriously ill or disabled and unable to work. The Insurance Council of Australia manages Find an Insurer, which can help homeowners identify insurers that offer the products they are looking for. Mortgage protection insurance insures borrowers and can cover mortgage repayments in the event of unforeseen circumstances, such as unemployment, injury, illness, or death. The LMI insurer can pay your lender an amount according to the LMI policy and then ask you, the borrower, to return this amount directly.
You can also get mortgage protection as part of your current life insurance or income protection policy, for example, through your superfund. Mortgage insurance for lenders (LMI) is insurance that a lender (such as a bank or financial institution) takes out to protect against the risk of not recovering the full balance of the loan if you, the borrower, cannot meet the loan payments. Life insurance providers typically offer mortgage protection insurance as a standalone policy and is specifically designed to repay the policyholder's mortgage in the event of death. For most healthy people, especially young people who buy their first home, the best mortgage protection insurance policy is often included as an extra in their life insurance policy.
There are only a select number of general insurance companies in Australia that still offer or provide this type of coverage. The LMI can be partially repayable if the loan is paid off early in the life of the loan (usually only during the first or second year). While it's impossible to say that a policy is the “best,” if you're a borrower, the best mortgage protection insurance will fit your budget and other needs comfortably.