What is Lenders' Mortgage Insurance? (LMI)
Last updated 11 August 2017
Lenders' Mortgage Insurance (LMI) is an insurance that protects the bank against the potential loss if you’re unable to repay your home loan. If LMI is required, as the borrower, you will need to pay the premium.
If the security property is sold before you repay your loan, the proceeds from the sale may not be enough to cover the amount owing on the loan. In this case, we can make an insurance claim to the LMI provider in order to cover any loss we incur. Keep in mind, LMI doesn’t protect you, and you’re still responsible for repaying the outstanding amount.
Is LMI the same as Loan Protection Insurance?
No. LMI covers the bank in the event that you’re unable to repay your home loan. Loan Protection Insurance is optional insurance from CommInsure which could help pay your loan repayments if you’re unable to work or if you pass away.
If you are experiencing financial difficulty in meeting your loan repayments, contact our Customer Assist Team for assistance.
When is it required?
We may require you to pay LMI depending on the circumstances of your loan. Contact us to find out.
How much does it cost?
How much the LMI premium costs depends on a few things, including the Loan to Value ratio (LVR), loan amount and whether there are other loans on the property. You can get an estimate of what the premium might be by using our Additional Home Buying Costs Calculator.
Your Home Lending Specialist can tell you how much LMI will cost when you discuss your home lending needs together.
When does it need to be paid?
If you do need to take out LMI, the premium will need to be paid at settlement. Usually, it is capitalised (added) to the total loan.
Talk to us
To discuss Lenders' Mortgage Insurance further you can contact us on 13 2224 between 8am and 8pm, 365 days, or visit any Commonwealth Bank branch.