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If your home loan requires LMI – mortgage insurance – this can be quite costly. Some borrowers have no choice but to pay mortgage insurance. But, luckily you can try to reduce this expense.
What is LMI or mortgage insurance?
LMI stands for “lenders mortgage insurance”. If you do not have a 20% deposit, a lender will generally require that you take out a mortgage insurance policy. This policy is paid out to the lender if you default on your home loan.
As many people do not have a 20% deposit before they buy a property, they usually have to pay LMI. While this cost may sometimes be added to the mortgage, it can be frustrating to pay this extra expense.
How can I reduce my mortgage insurance premium?
In a perfect world, everyone would have a 20% deposit ready to go when they applied for a home loan, and no one would need mortgage insurance. However, that often isn’t the case, especially with property prices being so high.
But, it is possible to reduce the amount that you have to pay in LMI. For example, say you’re purchasing a $ 1,000,000 property. Increasing your deposit size by $10,000, in some cases, can reduce your mortgage insurance premium by up to $13,000. This is a significant saving, and allows you to put that money towards your property, instead of insurance.
Assessing your options
Working out your best options when it comes to LMI, saving a deposit, and choosing a lender, can be pretty complicated. To make things simpler, Bee Finance Savvy offers a free consultation service.
You can get an over the phone or email consult, to assess your situation and find out what your options are – obligation free. To take advantage of this service, all you need to do is get in touch with our wonderful broker,
If you’d like to hear from just some of our satisfied customers, take a look at our reviews on WOMO https://www.wordofmouth.com.au/reviews/bee-finance-savvy-miranda
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