Lenders Mortgage Insurance is a required premium for home loans that are offered at a minimum of 80% of the property value. This protects lenders in case of a default. Does it have any benefit for borrowers?
LMI is a form of insurance that benefits the lender. You as a borrower do not get anything out of this. In case of foreclosure or a shortfall in the sale of a property, you are still liable. The LMI only covers for the losses of the lender, and you will have to pay the amount back to the insurer.
As a property investor, it is imperative that you understand that you are not exempted from liability. This is an insurance that lenders and not borrowers can claim. Although this benefits primarily the lender, the only advantage that you can get from this is the ability to secure a low deposit loan for your investments. Ensure that you have a strategic plan of action for your investments to avoid paying for the Lenders Mortgage Insurance.
Read more about this on the Smart Property Investment website.