Lenders Mortgage Insurance
Learn what Lenders Mortgage Insurance (LMI) is, how it works in Australia, how much it costs, and how to avoid it. Clear and easy-to-understand advice for first home buyers.
What is Lenders Mortgage Insurance (LMI)?
If you're buying your first home in Australia with a small deposit, chances are you've come across the term Lenders Mortgage Insurance, or LMI. It might sound confusing, but it’s actually pretty simple once you understand how it works.
How LMI Works in Australia?
Lenders Mortgage Insurance is a one-time insurance premium that protects the lender (not you) in case you can’t make your home loan repayments. In Australia, banks and lenders usually require LMI if you have a home loan deposit of less than 20% of the property value.
So if you're borrowing more than 80% of the purchase price, LMI will likely apply.
Who Pays for LMI?
Even though the insurance covers the bank or lender, the cost is paid by the borrower—that’s you.
LMI can be:
• Paid upfront, or
• Added to yourhome loan (which means you'll also pay interest on it over time)
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