Lenders’ Mortgage Insurance (LMI) is a premium payable by the borrower that protects the bank against the potential loss we may incur if you are unable to repay your home loan. If the security property is required to be sold before the loan is repaid, the money received from the sale may not cover the full amount that you owe us on the loan. In this case, we can make an insurance claim to the LMI provider to cover any loss we make. However, you are still legally responsible for repaying the amount outstanding under the loan contract, because you are not protected by the LMI.

When is it required?
We require you to take out Lenders’ Mortgage Insurance if we lend you more than 80% of the value of the property for standard loans, or 60% of the value of the property for Low Doc loans.

How much does it cost?
The LMI premium payable is dependent on a number of factors including the Loan to Value ratio (LVR), loan amount and other loan balances. To estimate what the LMI premium payable might be you can use our Additional Home Buying Costs Calculator by entering the details of your lending requirements and clicking “Calculate”.

When does it need to be paid?
The LMI premium applicable is payable upon funding of your loan and is usually capitalised (added) to the total loan. In these instances the bank will pay the premium directly to the insurer on your behalf.

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