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ISCOVER
Staff Reporter
Loan Market Group is encouraging first home buyers to use a mortgage broker to understand how Lender’s Mortgage Insurance works.
According to company spokesperson Paul Smith, LMI continues to be a source of confusion for first time buyers.
While interest rates will always be an issue for borrowers, it is unanticipated extra expenses such as LMI that often causes potential borrowers to adjust their plans.
Loan Market corporate spokesperson Paul Smith said borrowers with minimal deposits could pay several thousand dollars in LMI charges.
“On a $300,000 mortgage a prospective purchaser borrowing 90 per cent of the property value will be required to pay around $3,500 in mortgage insurance.
“Borrowing up to 95 per cent of the purchase price is even more costly on the LMI front – approximately $6,300 on a $300,000 mortgage and $13,585 on a $500,000 loan.”
Mr Smith advised anyone entering the market to do their homework.
“While it’s obvious to consumers to shop around for competitive interest rates, many people don’t realise the importance in considering the lender’s LMI charges,” he said.
“Mortgage insurance costs do vary between banks and lenders and this needs to be factored in against standard considerations such as interest rates and lender fees.
“As well as interest rate promotions, we have also seen banks and lenders come out with discounts on mortgage insurance.”
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