Lmi: All You Need to Know About Lmi

Lenders Mortgage Insurance or what is more commonly known as LMI is one of the easiest and most popular ways to enable someone to purchase their dream home.  This is especially true for those who are unable to meet the 20% downpayment requirement. 

It is also worthy to note that nearly 2 million Australian have used Lenders Mortgage Insurance to get into the real estate market earlier than later. 

What LMI does is give a prospective purchaser the opportunity to buy a property with minimal deposit requirements.  This is especially true when 95% of the loan immediately goes to the purchase of property.

Depending on your cash flow and the prevailing financial markets, one would need expert advice on whether to save in order to make a downpayment, or to go directly with LMI.

Working with the Giants

You don’t know LMI unless you are familiar with the two largest LMI insurers who virtually make the ground shake when it comes to LMI.  These two companies are Genworth Financial, and the QBE Group. 

However, this doesn’t mean that you have to get your LMI from them, as there are other LMI providers you can choose from. 

Cheapest LMI

The cheapest LMI is hard to determine as there are too many factors that should be considered.  It is better to enquire with companies specializing in LMI in order to determine the cheapest LMI that can work for you.

Lower Your LMI Premiums

Once you get your LMI approved the next step is to find out how to lower your premiums.  Generally the easiest way to achieve a reduced premium is if your loan amount is not that high.  The higher your loan amount, the higher the premium to expect. 

Another thing to consider is your loan to valuation ratio.  The higher your loan to valuation ratio the higher your LMI premium will be.  A concrete example of  this would be if you are borrowing  $800,000 on a $1,000,000 property.  This means you are borrowing 80% so you have an 80% loan to valuation ratio.

Your premiums also will depend on your lender and insurer.  With the number of lenders and insurers offering various competing rates, it would be very difficult to determine the exact premiums you will pay until you actually procure a LMI.  Choosing the best LMI is also a factor as this could make a significant difference in the amount of premiums to be paid.

First and Second Home Buyers Get Discounts

Take note that first and second home buyers get discounts to as much as 15% less on premiums paid.

No LMI Waived LMI

Sometimes it is possible for you to no longer pay LMI on exceedingly rare occasions.  The usual criteria is that you have 5% genuine savings, you are borrowing no more than 85% of the property value, you have been employed for at least two years, and finally you have a perfect credit history.

With all these facts on LMI you should have an idea if LMI is for you or not.  But do not immediately decide on your own.  With  expert help  one can determine if LMI is appropriate for your needs.