Lenders’ Mortgage Insurance (LMI) is a fee you’ll need to pay if your deposit is less than 20% of your home’s value. But here’s the kicker, it doesn’t protect you, it protects the lender in case you default on your loan. Yep, you pay for their peace of mind.
The cost of LMI varies depending on your Loan-to-Value Ratio (LVR), your lender’s rates, and a few other factors, but it can add up to thousands of dollars. If you’d rather spend that money on furniture (or, you know, literally anything else), there are ways to avoid it.
You can skip LMI by:
- Saving a bigger deposit (20% or more).
- Getting a guarantor (usually a family member) to back your loan.
- Applying for a Keystart loan or other government incentives.
LMI can be a necessary evil for some buyers, but if there’s a way to avoid it, it’s worth looking into!