When you make the decision to purchase your first home, there is a lot that you will need to accomplish. Perhaps one of the most challenging things will be the part in which you work to obtain the 20% of your loan that so many lenders require for your deposit.
Let’s imagine you want to purchase a home that’s 700, 000 (and in Australia, that’s close to rare). When you consider the prospect of making 20% of that, it’s easy to see why some people simply give up the dream of home ownership.
Don’t give up by any means. Learn more about the options that are currently available to you, one of which includes Lenders Mortgage Insurance (also known as LMI).
What You Need To Obtain LMI
Lenders Mortgage Insurance involves working with a lender who is willing to let you borrow a higher proportion of your purchase price. This will give you the opportunity to purchase your property with a deposit that might be smaller than what you would have had to pay under normal circumstances. The lender is going to be the insured party, which is definitely something that you will want to keep in mind. Lenders Mortgage Insurance is designed to provide the lender with the protection they require.
One of the most interesting aspects about Lenders Mortgage Insurance is the way it is very different from a traditional insurance product in one key way. This would be the costs that are going to be expected of you. Unlike other types of insurance products, your one-off premium is the only thing that you will need to really worry about in terms of costs.
There are a number of factors that play a role in how Lenders Mortgage Insurance is calculated. You will also find that there are online calculators you can take advantage of, providing you with a fairly strong indication of what you stand to gain. Some of the factors that may influence your LMI quote are your loan purpose, the borrower type, or the security type.
Once you have been approved, you will have your broker/lender prepare all of the relevant information and documentation. At the same time, they will also provide you with advice as it relates to whether or not your loan even needs an LMI in the first place.
In certain situations, you’ll want to be aware that at least part of your premium can be potentially paid back. This applies to those who repay their loans in 2-years-or-less.
Need help navigating this sort of financial territory? Your YFG lending specialist is there to help you find the best lending solution for you!
