What is Lenders Mortgage Insurance?
Lenders Mortgage Insurance (LMI) is insurance that a lender takes out to insure itself against the risk of not recovering the outstanding loan balance if you, the borrower, are unable to meet your loan payments and the property is sold for less than the outstanding loan balance.
It is important to understand that LMI covers the lender, not you (or any guarantor), even though the lender will usually pass on the cost of LMI to you. This means you cannot make a claim under the LMI – only the lender can make a claim. LMI is not mortgage protection insurance, which a borrower might separately take out to insure themselves against the risk of not being able to meet their loan payments.
You can find out more by reading our LMI Fact Sheet.