1. What is mortgage Insurance?

Mortgage insurance is a one-off payment by the borrower to the lender (or lender’s insurer) to ‘insure’ the loan. It insures the lender for any short fall on a loan, so if you were sold up because of defaults, it covers the difference between what you are sold for and the amount still owing. more about mortgage insurance

 2. How and why is Mortgage Insurance charged?

Whenever you have less than 20% deposit, you will almost always have to pay mortgage insurance or LMI. On 100% loans, dependent on the lender and the risk, mortgage insurance can cost up to 3% of the amount you are borrowing. Up to 95% loans (or 5% deposit), the amount would typically be up to 1.2% – 1.5% of the loan amount. As you get closer to 80% home loan (or 20% deposit), the cost usually discounts substantially. If you have 20% or more deposit and all other factors are in line, LMI is generally not charged on standard loans. more about lenders mortgage insurance or LMI