You need to add it to your budget if you’re borrowing more than 80% (have less than 20% deposit) of the property value.
It’s basically, an insurance policy your lender takes out on you in case you fold. …And you get the honour to pay the premium.
Quick way to estimate how much it will cost you:
LVR – percentage you borrow
LVR – 80% - 85% - Cost of LMI is approximately 1% of the loan amount
LVR – 85% - 90% - Cost of LMI is approximately 2% of the loan amount
LVR – 90% - 95% - Cost of LMI is approximately 3% of the loan amount
LMI can also provide opportunities to fast track a property purchase. It allows you to buy sooner (in some case buy at all). It can often be capitalised and added to the borrowed amount (without the need to actually fork out the money upfront).
Some lenders also provide possibility (for certain occupations) to borrow up to 85, 90 or even 95% of the property value without paying the LMI.
Speak to our professional to maximise your position and confidence in your financial decisions.
Do you still have some questions?
Article by Leigh Morris - Senior Credit Adviser | Director
General Disclaimer: This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. Please seek personal financial advice prior to acting on this information.