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Lender's Mortgage Insurance

Discussion in 'Investing Glossary' started by Glossary, 27th Sep, 2006.

  1. Glossary

    Glossary Active Member

    12th Sep, 2006

    Lender's mortgage insurance (LMI) is insurance which the bank lending you money will take out to protect it should you default.

    LMI is usually required when the bank is lending to you at a loan to value ratio (LVR) of more than 80%.

    The upside for borrowers is that the bank will lend more money, sometimes up to 95-97% of the value of the property. The downside is that the borrower must pay the lender's premium for the insurance.

    Also known as:
    • LMI