What is Lenders Mortgage Insurance (LMI)?
Lenders Mortgage Insurance is a one-off premium paid by the borrower when you have less than a 20% deposit (i.e. borrowing more than 80% of a property’s value). It protects the lender, not the borrower, in case you’re unable to repay the loan.
It enables you to enter the property market sooner, with a smaller deposit, but comes at a cost.
When is LMI Required?
Typically, LMI is required if:
- Your Loan-to-Value Ratio (LVR) is over 80%
- You’re applying for a home loan with less than a 20% deposit
- You don’t qualify for LMI waivers (e.g. certain professions, government schemes)
- You don’t have a guarantor on your loan
Some lenders may offer LMI waivers or discounts for:
- Medical, legal, or accounting professionals
- First Home Buyer / Government Guarantee Schemes
- Strong income and asset positions
- Guarantor loans
Is LMI Avoidable?
Yes – you may avoid LMI by:
- Saving a 20% deposit;
- Using a guarantor;
- Qualifying for LMI waivers through your profession; or
- Government schemes
