In this episode, Tim and Russell discuss LMI, or Lenders Mortgage Insurance. This is a fee that a bank may require a borrower to pay if they have a small deposit, generally less than 20%.
The amount of LMI is typically between 2–3% of the loan amount. Importantly, LMI protects the lender — not the borrower — in the event that the borrower defaults on the loan.
Tim and Russell discuss the option of capitalising the LMI fee, which means adding it to the loan amount rather than paying it upfront. This can make it easier to enter the market sooner without needing to save the full amount in cash.
They also discuss the potential benefits of paying LMI in order to get into the property market sooner rather than waiting to save a larger deposit. In a rising market, the capital gains from entering earlier can often outweigh the cost of LMI.
At Pure Real Estate, we specialise in managing residential properties. If you are interested in learning more about our property management services, please don’t hesitate to reach out.
Have questions about financing your Brisbane property purchase? Talk to Pure Real Estate about our property management services for Brisbane investors.