What is Lenders' Mortgage Insurance? (LMI)
Last updated 27 November 2017
Lenders' Mortgage Insurance (LMI) is a one-off insurance premium payable by the borrower that protects the bank against the potential loss we may incur if you are unable to repay your home loan. If the security property is required to be sold before the loan is repaid, the money received from the sale may not cover the full amount that you owe us on the loan. In this case, we can make an insurance claim to the LMI provider to cover any loss we make. However, you are still legally responsible for repaying the amount outstanding under the loan contract, because you are not protected by LMI.
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 require you to take out Lenders' Mortgage Insurance where there is an increased risk associated with your loan.
How much does it cost?
The LMI premium payable is typically based on the size of the deposit you have, and the value of the property. The circumstances of your loan will also determine whether LMI may apply. To estimate the LMI premium payable you can use our Upfront 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?
The LMI premium is payable upon funding of your loan and is added to the total loan. In these instances the bank will pay the premium directly to the insurer on your behalf.
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.