Here’s a breakdown of Lender’s Mortgage Insurance (LMI) costs in Australia, including a table for easy reference:
What is Lenders Mortgage Insurance (LMI)?
- LMI protects the lender (e.g., the bank) if you default on your home loan and the sale of the property doesn’t cover the outstanding debt.
- It’s typically required when you have a deposit of less than 20% of the property value.
How Much Does LMI Cost in Australia?
The cost of LMI depends on several factors:
- Loan-to-Value Ratio (LVR): The higher your LVR (bigger the loan compared to the property value), the higher the LMI premium.
- Loan Amount: Larger loans generally mean higher LMI costs.
- Lender: Different lenders have different LMI pricing.
- Profession: Certain professions (e.g., medical, legal) may qualify for discounts on LMI.
Estimated LMI Costs in Australia
Here’s a sample table illustrating LMI costs based on different LVRs and property values. Remember, this is just an estimate, and your actual costs may vary:
| LVR | Property Value ($)\$ | Estimated LMI Cost () |
|---|---|---|
| 85% | $500,000 | $7,500 – $15,000 |
| 90% | $500,000 | $12,500 – $25,000 |
| 95% | $500,000 | $20,000 – $35,000 |
| 85% | $800,000 | $12,000 – $24,000 |
| 90% | $800,000 | $20,000 – $40,000 |
| 95% | $800,000 | $32,000 – $55,000 |
Additional Notes about LMI Costs
- Stamp duty: Some states and territories charge stamp duty on your LMI premium, increasing the overall cost.
- How to pay: You may choose to pay the LMI upfront or add it to your loan amount (meaning you’d pay interest on it).
Where to Get Accurate LMI Quotes
- LMI Calculators: Many lenders and mortgage brokers have online LMI calculators to provide estimates based on your circumstances.
- Speak to a lender: Contact your bank or mortgage broker for personalized quotes.
Important: LMI can be a substantial cost when buying a home in Australia. Make sure you thoroughly understand LMI, how it works, and how it will affect the overall cost of your mortgage.
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