Lmi ---(lenders mortgage insurance)

[Lee The Mortgage MAn]

I often get asked question regarding Lenders Mortgage Insurance as Many people do not know what it is so here below is a briref explanation.

 

Lenders Mortgage Insurance covers the risk that a Lender(Bank) takes when they lend a client above 80% of the property value. The idea being that should a borrower default and a loss result to the lender the Mortgage Insurer will pay the bank for the loss.

 

This does not mean that the borrower is off the hook, the Mortgage Insurer will then pursue the borrower for the amount lost. As you might expect the lower the risk the lower the premium, so somebody borrowing 95% will ususallly pay more than somebody borrowing 90% and so on.

The best way to avoid Mortgage Insurance is to come up with a 20% deposit on your property, often easier said than done. But it is often worth considering saving a little longer to reduce the premium.

If you cant manage to raise enough for a 20% deposit and you really cant wait to buy a property, have no fear as some of the lenders will add the premium to the loan.

 

Hope this helps

If anyone has any further questions, feel free to get in touch