Helping you understand Lenders Mortgage Insurance
What is Lenders Mortgage Insurance?
Lenders Mortgage Insurance is an insurance policy that your lender takes out to protect itself against the risk that you (the borrower) default on your loan repayments and your lender is unable to recover the full outstanding loan amount. So, in the simplest of terms:
- A lender protects itself with Lenders Mortgage Insurance.
- A borrower buys a home sooner with a smaller deposit.
Lenders Mortgage Insurance protects your lender, not you, the borrower
It is important to note that Lenders Mortgage Insurance does not protect you (the borrower) or any guarantor. It should not be confused with Mortgage Protection Insurance which is a separate insurance policy that protects you (the borrower) if you are unable to make repayments on your loan.
How does Lenders Mortgage Insurance help you, the borrower?
It is important to note that Lenders Mortgage Insurance does not protect you (the borrower) or any guarantor. It should not be confused with Mortgage Protection Insurance which is a separate insurance policy that protects you (the borrower) if you are unable to make repayments on your loan.
Interest rates
Your rate could be different depending on your loan to value ratio.
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Lenders Mortgage Insurance protects your lender, not you, the borrower
Lenders Mortgage Insurance enables you (the borrower) to obtain a home loan that might not otherwise be available, by reducing the deposit you are required to provide. This means you will be able to:
- Buy a home sooner and stop paying rent; or
- Buy a more expensive property with the deposit that you have.
It may also enable you to borrow at an interest rate that is comparable to a borrower with a substantial deposit.
Lenders Mortgage Insurance is a one off cost
Lenders Mortgage Insurance is arranged by your lender and the premium is a one-off cost your lender pays to us (the insurer) upon settlement of your property purchase. This cost is passed on to you (the borrower) by your lender, as a fee.
Your lender will tell you how much it will cost after you apply for your loan. The cost will depend on various factors including the size of your deposit and the type of loan you take out.
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LMI premium estimator
Helia's LMI premium estimator is an online calculator that can provide you with an estimate of the premium payable.
You may be able to add the cost of this fee to your loan amount, which means you will pay interest on it over the term of your loan. Otherwise you will need to pay it up front, before your lender provides your home loan.
Refunds
The Lenders Mortgage Insurance fee that your lender charges you may be partially refundable if your loan is terminated within the first two years.
Alternatively, your lender may not provide a refund because it has arranged to receive a larger up-front discount on its Lenders Mortgage Insurance premium (instead of the right to a refund). In this case the full amount of this discount is passed on to you. This means that if you were to refinance your home loan with another lender or increase your loan amount, you may be required to pay a Lenders Mortgage Insurance fee again.
LMI premium estimator
Helia's LMI premium estimator is an online calculator that can provide you with an estimate of the premium payable.
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You may be able to add the cost of this fee to your loan amount, which means you will pay interest on it over the term of your loan. Otherwise you will need to pay it up front, before your lender provides your home loan.
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Eligibility
The Lenders Mortgage Insurance fee that your lender charges you may be partially refundable if your loan is terminated within the first two years.
To apply for a home loan, you’ll need to be:
- an Australian citizen or permanent resident.
- employed in, or retired from, the education sector OR be studying or have graduated from an Australian university in education OR be immediate family to a Teachers Mutual Bank member.
- an Australian tax resident living in Australia
- have an Australian mobile number
- income from an employer (PAYG) or self-employed with three months of income
Refinance tip
We accept three months of employment history for regular relief and casual teachers.
To apply for a home loan, you’ll need to be:
- an Australian citizen or permanent resident.
- employed in, or retired from, the education sector OR be studying or have graduated from an Australian university in education OR be immediate family to a Teachers Mutual Bank member.
- an Australian tax resident living in Australia
- have an Australian mobile number
- income from an employer (PAYG) or self-employed with three months of income
To apply for a home loan, you’ll need to be:
- an Australian citizen or permanent resident.
- employed in, or retired from, the education sector OR be studying or have graduated from an Australian university in education OR be immediate family to a Teachers Mutual Bank member.
- an Australian tax resident living in Australia
- have an Australian mobile number
- income from an employer (PAYG) or self-employed with three months of income
Refinance tip
We accept three months of employment history for regular relief and casual teachers.
To apply for a home loan, you’ll need to be:
- an Australian citizen or permanent resident.
- employed in, or retired from, the education sector OR be studying or have graduated from an Australian university in education OR be immediate family to a Teachers Mutual Bank member.
- an Australian tax resident living in Australia
- have an Australian mobile number
- income from an employer (PAYG) or self-employed with three months of income
Refinance tip
We accept three months of employment history for regular relief and casual teachers.
