Lenders mortgage insurance (LMI) protects the lender if a borrower cannot repay their home loan. It does not insure the borrower’s income or remove the borrower’s repayment obligations. See ASIC Moneysmart’s LMI definition.
Questions before accepting a loan
Ask the lender whether LMI applies to your application, what it costs, whether it is paid upfront or added to the loan, and what alternatives it will consider. A larger deposit may change an application, but waivers and eligibility are lender-specific. Do not treat a general example as an approval or a quote.
Compare the full borrowing cost
If a premium is financed, ask for repayments and total interest with that amount included. Compare the loan rate, fees and conditions as well as the LMI figure. Ask what happens if you refinance; do not assume the premium transfers or is refundable.
Is LMI mortgage protection insurance?
No. A policy intended to help with a borrower’s payments is a different product with its own covered events and exclusions. Ask which party receives the benefit before relying on either product.
What should I obtain in writing?
Request the lender’s quote, the treatment of the premium, relevant loan documents and any waiver conditions. Ask a mortgage broker to explain assumptions and alternatives. Cockatoo’s insurance information is general information and is not a loan offer or a personal credit assessment.