WHAT IS LMI?

Reception • Sep 15, 2017

Lenders Mortgage Insurance (LMI) helps Australian homeowners enter the market earlier through allowing you to borrow a higher percentage of a property’s value. For first home buyers, particularly those struggling to save a deposit but more than comfortable to meet their mortgage repayments, it can be a key tool to break free of the rental trap. Through financing a higher proportion of a property’s purchase price lenders take on a higher level of risk in the event you fail to meet mortgage repayments, and the property needs to be repossessed and resold. LMI is therefore paid by you to insure your lender against loss should this happen.

If you default on your loan, Lenders Mortgage Insurance only covers the lender, not you.

It is important to be aware that LMI only covers the lender if you default on your loan payments and the lender is unable to secure the full outstanding debt still owing, when they sell your property. LMI does not provide you with any cover. The bigger the percentage of the property’s purchase price you have to borrow, the greater the amount you’re likely to pay on insurance. So if your deposit is less than 20 per cent of the value of the property, and especially if you have no deposit at all, you will need to factor LMI into your home loan. Remember that in some cases lenders may require LMI even if you have a lower deposit, depending on the type and style of property you’re purchasing – for example, some inner-city apartments or rural land. LMI is usually paid as a one-off lump sum at the time of settlement but in many cases it can also be added into the loan amount and paid off over the life of the loan – a term known as capitalising the LMI.


Speak with one of our broker’s to assess whether this option is right for you.

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Navigating the World of Mortgages: What borrowing capability do you have?

01 Aug, 2023
Navigating the World of Mortgages: What borrowing capability do you have? Deciding to buy a house is an exciting milestone, and we're here to accompany you through the intricate world of mortgages. With the changes to interest rates that have happened over the last twelve months, it's essential that we are prepared and approach borrowing with a healthy attitude, as your choices now will have long-lasting implications, so let's ensure you're well-prepared for this homeowner journey. What should I consider when considering my borrowing limits? First, let's figure out how much you can borrow without sacrificing your peace of mind and daily joys. The key here is to measure your income against your expenses, including the potential mortgage repayments. A general rule of thumb: try to keep your mortgage repayments to no more than 35% of your gross monthly income. When it comes to borrowing generally, the higher your deposit and the higher your income, the more they should be willing to lend. The good news is we have more flexibility as mortgage brokers than the big banks, so we can look at your circumstances closer. Now, let's discuss some essential factors to consider when figuring out your borrowing limits. How much debt can you handle? Think about your lifestyle and what you're willing to give up versus what's non-negotiable. Be realistic about your dream home. Start with something affordable and gradually work your way up as your earnings grow and your equity increases. Think about the future. Are you planning to start a family, change jobs, or experience significant life changes? Factor those possibilities into your calculations. Keep an eye on interest rates and consider how further rises might affect your ability to make repayments. Reminder; A reminder that when purchasing a property, you will also need to factor in further expenses, such as, pay stamp duty, pest & building inspections, conveyancer fees, application fees, council rates, possible strata or body corporate costs, and utility bills to factor in. In Summary We'll help you evaluate your financial situation, research and compare over thirty lenders and loan options, and gather the necessary documentation to help you whether you are purchasing your first home or refinancing. What should I do next? Our dedicated team is committed to nurturing your financial well-being and helping you achieve a stronger and more secure future. Call our office on (03) 8657 8664 to organise a time to chat, and we also invite you to take advantage of our free resources by heading to our website. https://www.futurefinancegroup.com.au/

Refinancing: What Are Your Options As A Homeowner?

By Bree Jones • 19 Jun, 2023
At Future Finance Group, we understand that financial hardship has become a pressing concern for many homeowners across the country, including Melbourne. We want to help you explore the benefits of refinancing your mortgage. By assessing the right time to refinance and understanding the steps involved, we can guide you to potentially save money, access improved loan terms, and secure a more favourable financial future. What are the Benefits of Refinancing? During these challenging times, refinancing your mortgage can bring meaningful advantages. Firstly, it may allow you to take advantage of lower interest rates, reducing your monthly mortgage payments and offering much-needed relief. Additionally, refinancing allows switching from a variable-rate to a fixed-rate mortgage, ensuring stability and protection against future rate increases. By consolidating high-interest debts, you can streamline your finances and gain more control over your monthly obligations. Also, refinancing can unlock equity in your home, providing funds for essential expenses or other financial goals. Assessing the Right Time to Refinance Working out when to refinance can be challenging, mainly because we do not know what the future will bring. We are here to look at your personalised options and work with you to ensure your financial security. We can consider many factors, such as your credit score, home equity, and employment stability, to give you informed options. Steps Involved in Refinancing and Potential Cost Savings : We are here from the beginning to the end and strive to simplify the refinancing process for you. We'll help you evaluate your financial situation, research and compare over thirty lenders and loan options, and gather the necessary documentation. Our ultimate goal is to help you secure better terms, rates, and long-term cost savings to ease the pressure on you and your family. In Summary In these challenging times, exploring refinancing options can provide much-needed relief and open up financial opportunities for you as a homeowner. What should I do next? Our dedicated team is committed to nurturing your financial well-being and helping you achieve a stronger and more secure future. Call our office on (03) 8657 8664 to organise a time to chat, and we also invite you to take advantage of our free resources by heading to our website. https://www.futurefinancegroup.com.au/
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