| Lenders Mortgage Insurance (L.M.I.) – Explained

L.M.I. is an insurance policy that your home loan lender takes out to protect themselves if you default on the loan.

Lenders Mortgage Insurance is normally dependent on your “loan to value” ratio.  Put simply – Your deposit amount in relation to the property value.

You can easily calculate your LTV ratio.

Divide the total mortgage loan amount into the total purchase price of the home. (Eg: a home with a purchase price of $1m and a total mortgage loan for $800,000 results in a LTV ratio of 80%.

Other Risk Factors

Other risk factors that your lender may require Lenders Mortgage Insurance also include:

  • If you don’t have proof of income
  • Your employment history is not stable
  • Your credit history is not perfect
  • No savings record
  • Your loan is a low doc loan
  • You are a buying property off the plan

How to Avoid L.M.I

The best way to avoid lenders mortgage insurance is to have a deposit of 20 per cent or more of the property purchase price.

You may also be able to avoid paying lenders mortgage insurance if

  • You can qualify as a “high quality” low risk borrower
  • Have secure full-time full time employment 
  • Stable housing history
  • History of genuine savings 
  • A clean credit file.

Lenders Mortgage Insurance is a cost that your lender will pass on to you. Usually as a one off fee when setting up your home loan.

The Upside of L.M.I.

There is an up side of Lenders Mortgage Insurance. By utilising Lenders Mortgage Insurance, you have the potential to purchase a home sooner with a lower deposit. 

This may enable you to get into the housing market sooner, By doing so, the capital gains that you may make would outweigh the costs of lenders mortgage insurance.  Some lenders may allow you to borrow up to 95% of the purchase price

Disclaimer:  Although all care is taken.  We do not give any warranty whatsoever to the accuracy of any content.
This is not meant to be financial or professional advice and is only of general nature.  You must seek professional advice before taking any actions. The above information comes with no warranties whatsoever.  We take no responsibility for any actions you may or may not take. All content is of general nature only and is NOT to be taken as advice whatsoever

Martin & Austin
Waldhoff

0422 426 065
MWaldhoff@areaspecialist.com.au

336 Main Road,
Glenorchy 7010 TAS

 

Martin & Hans recently welcomed the addition of a 3rd generation Waldhoff, Austin, into the team. Inviting him to learn from their 40 years’ experience in the real estate industry. Austin is keen to establish himself alongside these two reputable & knowledgeable representatives of the Hobart property market. Acting as their protégé & personal assistant for the time being as he strengthens his skillset regarding client management, negotiations, and legal procedure.

Martin brings 15 years of experience to the table and prides himself on negotiating the best outcomes for his clients. Empowering his vendors with the most modern marketing strategies available during the listing and selling of their property. Being a strong supporter of local produce and community growth, Martin is a member of the New Town Community Association & other groups. He’s down-to-earth, literally & figuratively, enjoying spending time in the garden as much as inside your home to help evaluate its place on the market.

Hans has been in real estate for 25 years. Receiving multiple awards as Tasmania's No. 1 Salesperson during his reign as 'King of the Hill' in Sandy Bay. Previously a civil engineer and accredited valuer in Germany, Hans has a deeper understanding of property than your average agent, and you'll find his insights invaluable whether you're buying or selling property in Hobart. Now over 80 years old, Hans’ enthusiasm for real estate has never waned and he continues to prove himself as one of PRD’s top salespersons monthly, effectively bolstered by his son & grandson.

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