Lender's mortgage insurance protects the lender in the event that you default on your loan.
In nearly all cases, if you borrow more than 80 percent of what the lender considers to be the value of the property you will be required to pay mortgage insurance.
It is important to note that if you are purchasing a property then you will also be required to pay acquisition costs such as stamp duty, transfer fees and registration fees. What this means is that you will require additional funds over and above your 20 percent deposit or equity to pay these costs if you wish to avoid mortgage insurance.
It’s worth noting that government incentives for first home buyers can count towards your deposit.
Lender's mortgage insurance is usually charged as a one-off premium and is calculated on a sliding scale. That is, the greater the percentage of the property value you borrow and the more money you borrow, the higher the mortgage insurance premium payable.
Lenders mortgage insurance can be reduced or avoided altogether. There are several options available and circumstances will vary on an individual basis. You may find some more relevant information in the property section of this site, or contact us to discuss your options.
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