Lenders Mortgage
Insurance (LMI).
Accelerate property ownership
goals with help from LMI.
Accelerate property ownership goals with help from LMI.
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- About LMI-New-Arabic
What is LMI?
Lenders Mortgage Insurance (LMI) is an insurance policy that a lender takes out to protect itself against the risk that the home buyer or investor default on their loan repayments and the lender is unable to recover the full outstanding loan amount.
LMI makes loans more accessible to people who are looking to buy a home or investment property with less than 20% deposit.
How does LMI benefit the home buyer?
LMI enables home buyers to purchase a home or investment property without having a 20% deposit, typically required by most lenders.
This helps home buyers to:
Buy now with less than a 20% deposit
Start building equity in the property
Strengthen financial wellbeing and security
Case study: Using LMI to invest.
An investor wants to purchase a property valued at $600,000 and has $60,000 saved (10% deposit).
Typically, a lender would require a 20% deposit ($120,000), plus additional upfront costs.
With guidance from their mortgage broker, the investor was able to purchase the property with a 10% deposit by using LMI.
The LMI fee was added to the loan (capitalised), increasing the total loan amount and loan repayments.
By purchasing sooner with LMI instead of waiting to save a 20% deposit, the investor was able to enter the property market and start building equity.
This example is illustrative only. LMI protects the lender and capitalising the LMI fee increases the total loan and interest payable. Outcomes will vary and property values may fall. Capital growth is not guaranteed.
How much is LMI?
The LMI fee typically charged is between 1% and 2% of the loan amount, depending on the size of the deposit and how much the home buyer borrows.
LMI payment options:
- Paid upfront: the LMI fee can be paid upfront as a one-off cost at loan settlement.
- Capitalised into the loan: to reduce upfront costs, the LMI fee can be added to the loan amount and paid over time.
Helia exclusive offering
Family Assistance.
A home buyer may be eligible for a 15% reduction in their LMI fee when it is paid upfront by a family member at the time of loan settlement.
Home buyer’s should speak to their lender or mortgage broker about Helia’s Family Assistance feature.
Home ownership made simple with LMI.
LMI Lets Me In
Find out how more home buyers are using LMI to enter the property market sooner and achieve their home ownership goals.
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LMI Lets Me In
Find out how more home buyers are using LMI to enter the property market sooner and achieve their home ownership goals.
Start your home story with LMI.
Discover how LMI helped Mitch and Amelia break free from the rental cycle and purchase their first home with a 10% deposit.
Better, sooner, brighter.
Explore how LMI helped a couple buy a bigger, better property.
What is LMI?
Understand the cost, who it protects and how it can help home buyers purchase a home sooner.
Get home sooner
Struggling to save a 20% deposit? Enter the market sooner with LMI.
LMI Lets Me Invest
Find out how more investors and rentvestors are leveraging LMI to enter the property market now and start building equity sooner.
Frequently asked questions
LMI helps eligible home buyers to enter the property market sooner with a deposit less than 20%, including first home buyers, investors, rentvestors, upgraders and refinancers.
LMI is arranged by the lender to protect them if the home buyer defaults on their loan and the sale of the property doesn’t cover the full amount owing (including loan and sale costs). Any remaining amount is called a shortfall.
By reducing the lenders risk, LMI helps make it possible for home buyers to buy a property with less than a 20% deposit.
LMI has traditionally been viewed as an additional cost to avoid. While it does add to the cost of a home loan, many home buyers are using it as a way to purchase a property sooner, instead of waiting years to save a bigger deposit.
A home buyer may be eligible for a partial refund of the LMI fee paid if the home buyer repays their loan within the first two years.
| Age of policy | Refund percentage |
|---|---|
| Less than a year | 40% |
| 1-2 years | 20% |
Refund eligibility and amounts vary by policy. Refunds don’t apply where repayments are missed or the loan is in default.
Home loan variations
A home loan variation is when a home buyer refinances or varies their home loan with their existing lender.
If the home buyer increases the loan amount only (known as an Additional Advance or Top Up), a new LMI fee is payable. A credit for the LMI fee the lender charged at the commencement of the original loan will apply and the home buyer will need to pay the difference or minimum amount.
If the variation relates to other changes such as replacing the property that is used as security for the home loan, then a limited refund may be payable to the home buyer. The lender will be able to advise if refund options are available.
Financial hardship
If a home buyer is experiencing financial hardship, they should contact their lender early. Solutions are available to help them stay in their home while they navigate a difficult situation.