- Establish the loan size the borrower needs to afford their dream home
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Firstly, offer the loan amount they would get without LMI. If the customer looks disappointed, calculate and discuss the loan amount they would receive when taking up a loan with LMI. You will probably notice the look of relief, even excitement, on their face.
- Explain what LMI is
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LMI has enabled over 2 million Australians to get into their home sooner. LMI protects lenders against loss should a borrower default on their home loan and the outstanding loan is greater than the value of the property. Should the unfortunate situation occur where the borrower can no longer meet their repayments, and the sale of the property does not cover the outstanding loan, Genworth will cover the lender for the shortfall.
- Explain the benefits of LMI?
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Taking out a loan with LMI enables a borrower to get into a home without a large deposit. By using a lower deposit, a borrower is able free up more of their cash to pay for other fees associated with purchasing a home, or for other priorities such as school fees, a new car, or investments for the future.
- Explain the options for paying their LMI premiums?
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- Pay upfront - The borrower may choose to pay the LMI up front using their own savings or, for first home buyers, using their first homeowners grant. Or
- Capitalise LMI costs - Capitalising the LMI allows the borrower to pay the LMI premium as part of their monthly mortgage repayments.
- Calculate extra monthly cost of capitalising LMI
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Work out the extra monthly costs of capitalising LMI, this will help give the borrower a better idea of how little the extra they will be paying.