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Empower Wealth Blog post by Empower Wealth

Lender Mortgage Insurance Prices to Increase by up to 20%

This is terrible news for those looking to get into the market for buyers looking to borrow greater than 80% of the value of the property.  Our two mortgage insurers, who work in conjunction with all lenders by insuring the borrower as a risk to the lender, are increasing this Mortgage Insurance premium to the lenders.  There is already evidence in the market that these increased costs are being passed onto the borrower starting this month.

Lenders Mortgage Insurance (LMI) shouldn’t put you off buying a property. Even though it’s a cost none of us want to pay, it does give us an opportunity to get into the market sooner, rather than having to waiting until we can save 20-25% of the property value to avoid having to pay this premium.


Tip 1:

Those looking to make a purchase that could involve Mortgage Insurance should do their research to work out if they can actually save money quicker than the value of property is going up in the area they are looking, as this will reduce your Mortgage Insurance Premium and also ensure you are not paying interest if the value of the property is not going up.  If the property is increasing in value quicker than you can save, then getting into the market and holding for the long term will be a better financial outcome, even if you do have to pay the ‘one off’ premium.


Tip 2:

Different lenders actually charge different premiums and in some cases the premium of one lender over another could be a few thousand dollars.  Consider this when also considering the interest rate promoted by the different lenders, as although one lenders interest rate might be cheaper, their LMI premium might actually make their overall loan product more expensive than the lender with the higher interest rate.


Our best advice here is if you are going to have to pay LMI, its best to shop around to make sure your overall lending is competitive, and there is simply no easier way to do this than to work with a Mortgage Broker who can show you over 25 plus lenders premiums to help you work out the best loan deal for you.


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