Lender's Mortgage Insurance (LMI) Calculator
What does Lender’s Mortgage Insurance cost? Calculate how much you may need to pay for LMI if you have a low home loan deposit, and how much deposit you may need to avoid paying LMI.
Lender's Mortgage Insurance (LMI) is generally charged to all borrowers with a Loan to Value Ratio (LVR) over 80%. This is also known as having less than 20% deposit or equity.
Don't forget - it protects the lender, not the borrower, so if things go south, you'll still need to repay the loan.
Your estimated lender mortgage insurance payment is
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What is LMI and how much does it cost?
Lenders Mortgage Insurance (LMI) is an insurance policy that covers a mortgage lender against the risk that a borrower may default on their home loan repayments. LMI does NOT cover borrowers – it only protects lenders, such as banks, credit unions and fintechs.
Mortgage lenders typically take out LMI policies when a borrower has less than 20 per cent deposit or equity in a property. This is sometimes called having a Loan to Value Ratio (LVR) of more than 80 per cent.
Most lenders pass the cost of LMI on to the borrower. The less deposit/equity a borrower can provide a lender (or the higher the LVR), higher the cost of LMI may be. LMI can cost anywhere from thousands of dollars to tens of thousands of dollars.
If you’re a borrower looking for insurance to cover your mortgage payments in the event you’re unable to do so (such as if you suffer long-term illness or injury), you may need to look into taking out a mortgage insurance or income protection insurance policy.
How to use an LMI calculator
To estimate the cost of your LMI, our calculator needs two figures from you:
- Your property value: If you’re buying a property, this will typically be the purchase price. If you’re refinancing, it’s the current value of your home, which may have increased or decreased since you first bought it.
- Your loan amount: How much you plan to borrow to buy the property. For example, if you’re buying a $500,000 property with a 20 per cent deposit ($100,000), your loan amount will be $400,000.
Using these figures, our LMI calculator can estimate the cost of LMI that you’ll need to budget for if you plan to apply for a home loan with a deposit of 15, 10, or 5 per cent of the property value.
Home loan offers with lower minimum deposit requirements are more likely to charge higher interest rates. Compare home loan options and consider your choices before you apply.
How do I pay for LMI?
Using our calculator, you can estimate the cost of LMI when budgeting for your home loan’s upfront costs, which may also include mortgage establishment fees, property inspection fees, and stamp duty.
Some lenders will let you add the cost of LMI to your home loan, so it can be paid over time as part of your mortgage repayments. This can help remove a significant upfront cost from your home loan, and may only slightly increase your mortgage’s monthly cost. However, this means you’ll be charged interest on your LMI, which could lead to your LMI costing much more over the decades-long term of most home loans than it would if it was paid upfront.