Lenders Mortgage Insurance
If you are borrowing more than 80 per cent of the property value, your lender will usually require you to pay for Lender’s Mortgage Insurance (LMI). Taking this type of insurance will protect the lender in case you default on the loan and the eventual sale of the property is not enough to cover the whole loan value.
Because it reduces risks, lenders usually allow you to lend more, which becomes an incentive to the borrower. In general, many home buyers agree to pay LMI than wait for several years of saving for a deposit. Your lender will usually arrange the LMI and can be added to your total loan amount to reduce the upfront costs