Time to read : 2 Minutes
Did you know...? is Expert Analysis's quick must-know fact for Australian households.
Think of it as an espresso hit of personal finance news.
Today's Did you know...? is about mortgage insurance. Does mortgage insurance actually insure your mortgage? It does... but not in the way a lot of people may assume.
Go deeper: what is mortgage insurance and when do I need it?
Mortgage insurance - also known as Lenders Mortgage Insurance (LMI) – is designed to protect the bank or lender in case you can't repay your home loan.
Anybody who has less than a 20% deposit will typically be asked to also take out LMI.
LMI is a one-off, up-front cost that you pay when taking out the mortgage. It'll vary in cost depending on how big your deposit is and how big a risk the bank or lender thinks they're taking on by insuring you.
Homeowners wanting to protect themselves could look at mortgage protection insurance or life insurance, which can offer protection. We'd recommend speaking to a financial adviser before making any decisions in this area.
Be aware: there are government schemes that can get you onto the property ladder with a lower deposit. Speak to a broker who can advise you. We've put together a list of key questions for first time buyers to ask here.
Financial Disclaimer:
The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions.
