LMI is a cost passed on to you from the lender if your home loan is over 80% LVR(Loan to Value Ratio). In short, it covers the Lender in the event you default on your loan and unable to repay it.
In this video I show you how the premiums increase exponentially as you go from 85% to 95% LVR. It’s not a linear increase as you might expect.
Some ways to reduce your LVR is to reduce your property purchase price, increase savings, use security guarantors and cross-collateralise your loan with another property.
I hesitate on the cross-collateralise option since it’s preferred to keep loans separate which help if you are building an investment property portfolio, but the option is still there none the less.
Are there any home loan topics you would like me to cover? Just let me know in the comments below and I’ll see if I can cover it next time!
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Lender’s Mortgage Insurance (LMI) Premiums