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You will only need mortgage insurance if you borrow more than 80% of the property value.
Whether mortgage insurance is required depends on your lender.
When you borrow more than 80% of the property value, the lender will seek mortgage insurance to protect the lender from losses. Mortgage insurance provides coverage to the lender rather than the borrower, should you not be able to repay your loan.
It is a one-off payment which can be included in your Yellow Brick Road home loan.
Lender’s Mortgage Insurance premiums vary depending upon individual borrower profiles, and the amount of mortgage insurance is generally a larger amount if you are borrowing a higher proportion of the value of a property. The relationship between the amount borrowed and the value of the property is often known as the Loan-to-Valuation ratio, which is also known as LVR.
Save More to Pay Less
You may wonder, why does it make sense to pay mortgage insurance if it does not benefit the borrower? The key benefit is that, with Lender’s Mortgage Insurance you are able to purchase a property with a smaller deposit. For some borrowers it may make sense to save a larger deposit so that a smaller Mortgage Insurance premium, or no mortgage insurance, is required.
Need to Know More?
If you would like to know the specific amount of Lender’s Mortgage Insurance you may be charged, your Yellow Brick Road Adviser can assist you with these specific details, and the lending options which may best suit your needs.
Contact us today on 1800 927 927.