If you plan on borrowing more than 80% of your property value – which is very common – you’ll need to tuck some money aside for Lenders Mortgage Insurance (LMI). Lenders Mortgage Insurance is a one-off payment designed to protect the lender (a.k.a., the bank) if you find you can’t meet your repayments and the home must be sold with debt outstanding.
Lenders Mortgage Insurance is traditionally paid at settlement, and the amount you need to pay depends on a couple of things, including the value of your property and how much you intend to borrow. For example, you’ll pay more if you’re borrowing 95% of the purchase price, vs 90%.
However, there are plenty of other options you can explore that allow you to get into a home without Lenders Mortgage Insurance, and without having to pay a hefty deposit – like Guarantor loans (a.k.a., the bank of Mum and Dad). For more information check out our guide to Guarantor loans now or chat to a Oui Finance broker (or a broker of your choice).