LMI Insures Lenders, Not Borrowers
Lender’s Mortgage Insurance (LMI) is there to cushion the lenders and not the borrowers, says Stefanie Garber in an article for the website Smart Property Investment. It is well known that borrowers availing more than 80% succour (of property value) from banks need to get an LMI cover.
This cover, however, aims to indemnify the lender against borrower default. While it is true that the LMI does help the lender/bank cover his/its losses in case of Foreclosure, the insurer asks for the same amount from the defaulting party (homeowner).
This said, the LMI certainly helps buyers fetch property in a coveted area for a very small deposit fee, and then win through its capital gains.
You can read the original article here.
Do you think the premium of LMI is stiff for first home buyers?