Can you claim lenders mortgage insurance

The most challenging part of buying a property is financing it. However, lenders also face a risk if a borrower defaults on their mortgage repayments or goes MIA or fall behind in making their payments. In addition to protecting the lender, lenders mortgage insurance serves as an opportunity for investors as well.

LMI Insurance can also ensure that the borrower can shoulder financial responsibility since these insurances will determine if a borrower is capable of making monthly payments. The risk LMI provides for the lender is especially important to investors because it allows them to take on lower deposits on home loans, which means buyers can acquire properties faster.

The policy covers your mortgage repayments, which will be paid to the lender if you default on your mortgage. If this occurs, the insurer will then contact you to secure the funds. Mortgage Protection Insurance insures the borrowers and can cover mortgage repayments in the event of unanticipated circumstances such as unemployment, injury, illness or death. LMI means that even with a small deposit, you have the potential to own your home sooner.

Talk to a Mortgage Choice broker today to get started on your home loan journey. You may be able to buy your new home sooner than you think. Our home loan experts will evaluate your individual savings situation and help set you on the path to your home ownership goals.

The cost of LMI can vary depending on the percentage of the property value borrowed and the loan amount. The premium can also vary depending on whether your contribution is made up of genuine savings or has come from other sources, such as a gift. For these reasons, an accurate cost of LMI cannot be given until a property and lender have been selected, and could be a flat fee of up to thousands of dollars.

The LMI premium is a one-off, non-refundable fee which is paid at loan settlement. For most lenders, the LMI fee can be included in the loan amount. If the LMI is added into the home loan amount, the borrower will pay interest on the total loan and it will increase the minimum monthly loan repayments.

LMI is arranged by the lender, not the borrower, although the borrower pays for it. Each lender has their own policy regarding when LMI is required and how much it will cost. If a borrower refinances their loan, the premium is not transferable.

If LMI is required on the new loan, a new premium must be paid. One method to avoid paying LMI is to save up the minimum deposit for the property purchase. The answer to this question will vary depending on your individual circumstances and goals. Your Mortgage Choice broker can discuss your options with you and help you run the calculations to reach an informed decision.

LMI can account for a sizeable chunk of your home loan, and if you need to absorb this cost into the loan, you may need to assess your target budgets for your home purchase.

Because it is actually the mortgage insurance company taking the risk on your home loan, they may have stricter criteria for granting approval. Obtaining LMI approval can also extend the entire home loan application process.

You mortgage broker will be able to identify not only your likelihood of LMI approval, but also the length of time the application may take.

Your broker will be able to suggest different lenders and home loans to help you meet any relevant requirements to get the loan approved faster. It could potentially differ significantly between providers. In addition to the steps above, consider too that lenders and their insurers view some occupations as being at less of a risk of redundancy or job loss, and may waive the cost of LMI if they view an applicant as being particularly secure.

However, Mortgage Choice says this will be assessed on an individual basis and you may need to also be a member of specific professional associations. It could still be worth asking your lender about it. An Aussie mortgage broker can help you with this home loan product as well as many other home loans from leading lenders. Fill in the form below. Let Aussie help find the right home loan for you.

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