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90 Marine Terrace Fremantle, WA, 6160

Lenders Mortgage Insurance

Lenders Mortgage Insurance
I’m Brodie Brown, Managing Broker here at BH Brown Mortgage Brokers. Based in Fremantle we specialise in home loans for a range of different situations and work with clients right Perth’s Western Suburbs.

Lenders Mortgage Insurance EXPLAINED

Lenders Mortgage Insurance is often referred to as LMI. It is insurance that a lender takes out to insure itself against the risk of not recovering the full loan balance if the borrower (you) were unable to meet loan repayments.

LMI is a one-off fee charged by the Lender to you when you need to borrow more than 80% of the value of the property.

I’m Brodie Brown, Managing Broker here at BH Brown Mortgage Brokers. Based in Fremantle we specialise in home loans for a range of different situations and work with clients right Perth’s Western Suburbs.
Lenders Mortgage Insurance

LENDERS MORTGAGE INSURANCE EXPLAINED

Lenders Mortgage Insurance is often referred to as LMI. It is insurance that a lender takes out to insure itself against the risk of not recovering the full loan balance if the borrower (you) were unable to meet loan repayments.

LMI is a one-off fee charged by the Lender to you when you need to borrow more than 80% of the value of the property.

Interest Only Loans and Repayment Types FAQ

Benefits of LMI

  • The benefit of LMI is it allows lenders to provide home loans to customers who do not have a substantial deposit but would otherwise meet the lenders credit requirements.
  • LMI covers the outstanding balance of the loan owing to the lender if the sale of the property does not cover the total loan amount.

What is the cost of LMI?

  • The LMI premium payable can either be included into the loan amount (called capitalisation of LMI) or paid upfront on settlement. The lender will be able to provide you the applicable costs of LMI.
  • It is important to note, if you choose to capitalise the LMI, your loan repayments are based on the higher loan amount which includes the LMI premium.
  • The cost of LMI will vary and it will depend on the lender, how much is borrowed and the size of the deposit.

Is LMI refundable?

  • LMI may be partially refundable if the loan is terminated early, usually within the first two years.
  • Each lender will have their own refund arrangements.

What happens if a borrower defaults and the property is sold?

  • If the borrower is unable to meet their loan repayments and there is no other resolution, the property may need to be sold to cover any outstanding loan amount.
  • The LMI insurer will pay the lender in accordance with their LMI policy and could then ask the borrower to repay this sum directly to them.
  • LMI does not protect you or cover your loan repayments in the event you are unable to make the repayments on your mortgage. You should discuss personal insurance options such as Mortgage Protection Insurance with your broker to cover any unforeseen circumstances.

What happens when the loan is refinanced?

  • LMI is lender specific, which means if you refinance your home loan to a different lender and you borrow more than 80% of the value of the property, you will have to pay LMI again.
  • Do your research, as this may outweigh the benefits of refinancing to a lower interest rate.
  • If the equity in your home has increased or you have paid down the principal on your loan, you may not need to borrow more than 80% with the new lender and therefore avoid paying LMI again.

Case study

Bob and Jill have found a home they want to buy for $500,000. Typically, they would need a 20% deposit ($100,000) to secure a loan from their lender. By taking out Lenders Mortgage Insurance, their lender is prepared to provide a loan up to 95% of the value of the home.

This means that Bob and Jill can secure a home loan sooner with a 5% deposit ($25,000) and stop paying rent. Their lender passes on the Lenders Mortgage Insurance premium cost to Bob and Jill by way of a fee called a “premium”.

The Lenders Mortgage Insurance protects the lender if Bob and Jill default on their loan repayments
– it does not protect Bob and Jill.

 

Important: If you experience problems in meeting your loan repayments, you should contact your lender as soon as possible as you may be able to arrange a payment variation on the grounds of financial hardship. More information about LMI can be found at www.moneysmart.gov.au or www.asic.goc.au

HOW TO GET STARTED

To get started, call us during business hours on 08-9433-1312 or submit an online enquiry and one of the team will review your request and schedule a time to discuss in more detail.

Doing Finance Differently

It’s what BH Brown does differently to other brokers, banks, loan supermarkets and ‘no service’ digital lenders that ensures the Success of our Clients.

We are Professional Mortgage Brokers, committed to helping Our Clients purchase homes, investment property and projects.

We can arrange construction loans, unlock “hidden equity” to invest and restructure finance for a smooth transition to retirement.

BH Brown excels in solving large, complex, multi-property and multi-entity deals and has the Reputation to prove it.

  • We deliver wealth-focused mortgage and loan advice
  • We make things happen that our clients had been told weren’t able to be done
  • We are all about relationships
  • We take it personally
  • We have every available loan option from Banks to Private Lenders
  • We employ the latest software almost eliminating paperwork and forms
  • We take responsibility and control over the transaction
  • We work for our clients with a sense of urgency
  • We do whatever it takes to make the deal happen
  • We always talk in terms of Your success
  • We Guarantee Our Service

An Impeccable Reputation

Brodie and Josie were complete professionals throughout the whole process. He and his team really do what he says they will do and provide you the best service possible.
Peta Duncan
2024-02-05
Love working with Brodie Brown and his team. Great advice and support. Make the whole process easy:)
Anne-Marie Erickson
2024-02-01
My wife and I had the pleasure of working with Brodie Brown and his exceptional team for our first investment property purchase in Perth. From the moment we engaged with Brodie, we were impressed by his professionalism, efficiency, and depth of knowledge. Brodie and his team made the entire process seamless and stress-free for us. They provided continuous touch points throughout, ensuring we were always informed and reassured that everything was proceeding according to plan. Their attention to detail and commitment to excellence truly set them apart. We are incredibly grateful for Brodie's expertise and guidance throughout this journey. His dedication to finding the best mortgage solution for us was evident in every interaction we had. We wouldn't hesitate to recommend Brodie and his team to anyone in need of a mortgage, knowing they'll be in the hands of a true industry expert.
Jon Butler
2024-02-01
It’s always a pleasure to have Brodie and the team at BH Brown manage our mortgages and finances. They have helped my partner and myself obtain mortgages, refinance, restructure and reorder to best suit our current and often changing needs. If ever we are unsure of something or have a question, just a quick phone call and one of the BH Brown team has us the answer, they never fail to offer us sound, practical and knowledgeable advice and outstanding service. Always the highest possible star rating for BHBrown Mortgage Brokers. I highly recommend them to anyone!
Chad Auth
2024-01-31
I’d been on Brodie’s email list (downloaded AND read the book!) for about 6 months, when Troy telephoned to see how we were going and if we needed anything. I didn’t know it at the time but we were actually in a prime position to refinance our new house away from Keystart! I had no idea. So that’s what we did, with no lenders mortgage insurance required to boot! Troy is very friendly, very patient (we took longer than we should have with paperwork etc…) and very professional. The whole process was very easy and pain-free, and we never felt rushed or pressured to continue until we understood things. Troy has helped us out twice now with finance. He was away on holiday the second time, poor guy, and he still helped us out with cheerfulness. Many thanks Troy!! Oh, and I know full well that Brodie’s emails are marketing, but I really do enjoy reading them and learn from them, and I recommend that you sign up to his list!
Cameron Brown
2024-01-30
Brodie and his team provide excellent service and advice, recommend them in a heartbeat.
Jason Wallis
2024-01-14
Brodie and his team were awesome they listened to our circumstances and guided us through the whole process to get the result everyone wanted thoroughly recommend to al expat kiwis because he likes his rugby aswell thanks team
Megan Michelle
2024-01-11
Did a free one off phone consult and Brodie was great in quickly assessing our situation and giving sound advice. Highly recommended.
Kevin Eipe
2024-01-10
Brodie and the team did a great job of finding me the best loan for my situation, and they made the process easy. Highly recommend.
Tim Fisher
2024-01-07
Brodie has been terrific over the last few years offering reliable property and mortgage advice. Highly recommended.
Jack Selva
2023-12-30
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