LMI
Lenders Mortgage Insurance
A one-off insurance premium that protects the lender (not you) when your deposit is under 20%.
Lenders Mortgage Insurance is a premium paid by the borrower that insures the lender against loss if the loan goes into default. LMI is typically required when your loan-to-value ratio exceeds 80%. The premium can be tens of thousands of dollars on an average Australian home loan and is usually capitalised into the loan. Avoiding LMI is the main reason buyers use schemes like FHBG or pay a 20% deposit.
Is Lenders Mortgage Insurance refundable in Australia?
Lenders Mortgage Insurance is usually non-refundable. A small partial refund may be available if the loan is repaid in full within the first 12-24 months and the lender's LMI provider agrees, but most LMI is treated as a one-off, non-recoverable cost. LMI protects the lender, not the borrower.
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See the full glossary → 91 Australian first home buyer + homeowner terms, organised by category