Gateway Introduces a Flexible Monthly Premium LMI Option
It’s no secret that the biggest challenge that most first home buyers face is having to save for a deposit, rather than being able to afford the loan repayments. In response to this and in our continued efforts to assist Australians with their dream of home ownership, we are now offering our Members the flexibility to pay for Lender's Mortgage Insurance (LMI) monthly. This option to pay a monthly premium better meets the need of those buyers who have the income to comfortably service their loan but may struggle to save the appropriate deposit.
This will also provide borrowers with an alternative to capitalising the LMI premium into their loan or paying the entire premium in one upfront payment. Borrowers can now pay the LMI premium by the month, which means a greater portion of their loan can be utilised to support the purchase of their home.
This option will take into consideration the individual circumstances of the borrower, including how long they intend to hold the property, how long they plan to pay down the principal and interest, and whether they are taking out an interest-only mortgage.
Importantly, our new Monthly Premium LMI enables borrowers to stop paying the monthly LMI premium when their loan balance reduces to an 80% loan-to-value ratio*.
Key differences between paying upfront LMI or paying monthly LMI
Upfront Premium LMI |
Monthly Premium LMI |
|
Premium Payments |
Single premium payable upfront when the loan is taken out | Premiums payable monthly for the duration of insurance coverage |
Premium Capitalisation (included in the loan amount) |
Borrower option subject to LVR limits | Premiums are not capitalised into the loan therefore there is no impact on the LVR. However, the cost of the monthly premium is considered in determining the borrower’s ability to service the loan |
Policy / Risk Duration |
Typically, 30 years | Coverage ceases when loan reaches 80% LVR* |
Top-ups |
Top-up loans are reassessed and repriced with a credit applied for premium already paid | Top-up loans are reassessed and repriced with the monthly premiums adjusted to reflect the changes to the loan |
Portability |
No | N/A, as your monthly payments will cease when you home loan is refinanced, and a new policy will be created with your new or existing lender. |
For more information, please see our Monthly Premium Lender's Mortgage Insurance page.
*The loan’s Schedule Balance, not inclusive of redraw and offset account balances, must be at or below an LVR of 80% when the monthly premiums are calculated and applied.
