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Episode 5 - Lenders Mortgage Insurance (LMI) vs 20% Deposit: Making the Best Choice for Your Home Purchase
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Lenders Mortgage Insurance (LMI) vs. 20% Deposit: Making the Best Choice for Your Home Purchase
Description: In this episode of Established Wealth, Tiffany and Toby dive deep into the pros and cons of Lenders Mortgage Insurance (LMI) versus saving for a 20% deposit. Gain insights into the intricacies of Loan to Value Ratio (LVR), the differences between bank and market valuations, and how LMI can help you enter the property market sooner.
Key Takeaways:
- Understanding LVR (Loan to Value Ratio): Learn how LVR measures loan risk, why an LVR below 80% means no LMI, and how a lower LVR appeals to lenders by reducing risk. Explore how some lenders offer higher LVR loans to ease deposit requirements, applicable to various loan types, including investments and refinancing.
- Difference Between Bank and Market Valuations: Discover the conservative approach of bank valuations versus the current market demand considerations of market valuations. Understand how lenders often calculate LVR using the lower figure between bank and market valuations.
- Introduction to Lenders Mortgage Insurance (LMI): Understand how LMI protects lenders if borrowers default on mortgages and why it's usually required for loans exceeding 80% of the property value. Learn about the non-refundable premium added to the loan amount borrowed.
- Benefits of LMI for Borrowers: See how LMI allows entry into the market with a smaller deposit, using the example of purchasing a $700,000 property with just a 5% deposit. Learn why the cost of LMI can be outweighed by potential property growth.
- Considerations Before Utilizing LMI: Evaluate your individual circumstances before deciding to use LMI. Seek specialized advice tailored to your specific situation, and understand how mortgage brokers can offer free expert advice and access to various lenders.
Join Tiffany and Toby as they recap the benefits of LMI, share cost-saving strategies, and introduce Established Wealth’s free online courses for financial education. This episode is essential for anyone considering property investment and striving for financial freedom.
Contact Us
Website - www.establishwealth.com.au
Email - toby@establishwealth.com.au & tiffany@establishwealth.com.au
Instagram - Toby_MortgageBroker & Tiffany_MortgageBroker
Download E-Book - https://establishwealth.com.au/ols/products/establish-wealth-e-book
LMI caculator link - LMI fee estimator. - Helia
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