What You Need To Know About Lenders Mortgage Insurance
There are a number of different requirements for home loans, but lenders are mostly concerned with the initial loan application process. This is important information for those looking to take out money for a new house.
Borrowers with large deposits and a steady income are more favoured than those with less to anchor their investment.
Anyone who wants to borrow more than 80 per cent of the value of the property is required to take out Lenders Mortgage Insurance (LMI).
LMI must be paid by the buyer, but protects the lender if the borrower is unable to repay their loan and the sale of the property doesn't cover the outstanding loan balance.
Because the lender is protected by LMI, some lenders are willing to consider loan deposits as low as five per cent.
However, LMI can be expensive and must be factored into your costs when working out a financial plan.
The LMI premium is calculated based on a number of factors, ranging from how much you want to borrow and the LMI product type – for example, first home buyer or low-doc loan – through to the loan-to-value ratio.
To get more detailed information on your situation, talk to a Loan Market mortgage broker today.Tags: home loans, mortgage broker