Mortgage Insurance Calculator for Lenders | Your Australia mortgage


Saving that elusive 20% deposit can be tricky, but it’s possible to buy a property with less than that if you’re willing to pay an additional fee: Lender’s Mortgage Insurance (LMI).

While LMI may seem like another cost meant to weigh on homebuyers, LMI may actually help those with the 5% minimum deposit to enter the market earlier before home prices hit. real estate does not increase even more.

What is mortgage loan insurance?

LMI is an insurance policy that covers the mortgage lender against any losses they might incur if the borrower does not repay the loan. IMT does NOT cover the borrower – it only covers banks and lenders.

LMI is widely viewed as a victory for those making their way into homeownership, as it allows the borrower to enter with a smaller deposit, allowing them to enter the mortgage earlier on. the market.

There are two main providers of LMI in Australia: Genworth Financial and QBE.

How much does IMT cost?

LMI can be a big expense and can cost anywhere from a few thousand dollars to tens of thousands of dollars. That’s why it’s important to factor this cost into your overall purchasing budget.

The cost of LMI can vary depending on several factors, including:

  • If you are a first-time home buyer

  • What condition is your property in?

  • If you are an owner-occupier or an investor

  • The loan amount

  • Your loan-to-value ratio (LVR)

  • Your profession / sector

Using the Genworth LMI Calculator, here’s how much LMI could cost you based on the value of the property and the size of your deposit.

Property value

Deposit $

To pay %

term of the loan

Initial LMI premium

Monthly LMI premium

$ 400,000

$ 20,000

$ 40,000

$ 60,000

5%

ten%

15%

Up to 30 years

$ 11,897.45

$ 6,943.91

$ 3,770.13

$ 292.12

$ 145.25

$ 84.59

$ 600,000

$ 30,000

$ 60,000

$ 90,000

5%

ten%

15%

Up to 30 years

$ 23,954.25

$ 13,284.00

$ 6,463.09

$ 438.19

$ 217.88

$ 126.89

$ 800,000

$ 40,000

$ 80,000

$ 120,000

5%

ten%

15%

Up to 30 years

$ 31,939.00

$ 17,712.00

$ 8,617.45

$ 607.62

$ 318.68

$ 190.09

These estimates are for first time home buyers on an owner occupied loan.

How to use our LMI calculator

Before applying for a home loan from a lender, it’s a good idea to find out how much LMI could cost you, and the earlier you know, the more financially prepared you can be for it.

Forward planning will also help you decide how you will pay for LMI, whether you will pay it up front or in increments as part of your monthly repayments.

Your mortgage LMI calculator can help you figure out how much you’ll need to pay on a 30-year loan term.

All you have to do is select if you are a first-time buyer and provide the value of the property and the total amount you will need to take out for the home loan.

Here’s an example: Assuming you’re a first-time home buyer who plans to buy a $ 800,000 home and borrow with only a 15% ($ 120,000) deposit, you will need to pay around $ 8. $ 700 for IMT.

How to avoid LMI

LMI can be a big expense and most borrowers would prefer to avoid it. But without it, many first-time buyers would be shut out of the market due to the time it takes to save a 20% down payment.

If you are not prepared to factor LMI into your overall purchasing budget, or if you are unable to cover its costs but still want to borrow more than 80% of the cost of When buying a property, there are several ways to get around the premium payment or reduce the cost:

  • Use your profession to your advantage. Some banks and lenders have a list of accepted professionals, for whom they will consider waiving or reducing LMI. People employed in medical, accounting, financial, legal or engineering fields can avoid paying it or access a cheaper premium. Regardless of your career, before entering into a mortgage deal, you need to be sure that you are financially equipped to ensure repayments throughout the life of the mortgage.

  • First home loan deposit scheme. Government grants such as the First Home Loan Deposit Scheme (FHLDS) allow first-time homebuyers to purchase a property with a deposit as low as 5% and the government will essentially act as a guarantor for the remaining amount. which means that the buyer does not have to pay. for LMI.

  • Have a guarantor. Another way to get around LMI payment is to have a guarantor. Many lenders will forgo LMI if the borrower is backed by a quality guarantor who will accept responsibility for loan repayments if the borrower is unable to make them.

  • Apply with some lenders. Some lenders offer discounts or even waive LMI fees for some borrowers. ME Bank has a special 25% LMI discount for first-time homebuyers, while St. George has reduced LMI to just $ 1 for qualifying first-time homebuyers with LVR up to. ‘to 85%.


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