How to position LMI with your borrowers
Are you finding it hard to position Lenders Mortgage Insurance (LMI) with your borrowers? Below are some handy tips to help. Often a new approach can make the world of difference.
Establish the loan size the borrower needs to afford their dream home
Firstly, offer the loan amount they would get without Lenders Mortgage Insurance. If the borrower looks disappointed, calculate and discuss the loan amount they would receive when taking up a loan with Lenders Mortgage Insurance. You will probably notice the look of relief, even excitement, on their face.
Explain what Lenders Mortgage Insurance is?
Lenders Mortgage Insurance has enabled over 2 million Australians to get into their home sooner. Lenders Mortgage Insurance 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 Lenders Mortgage Insurance?
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 to 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 Lenders Mortgage Insurance premiums?
Pay upfront - The borrower may choose to pay the Lenders Mortgage Insurance up front using their own savings or, for first homebuyers, using their first homeowners grant.
Capitalise Lenders Mortgage Insurance costs - Capitalising the Lenders Mortgage Insurance allows the borrower to pay the Lenders Mortgage Insurance premium as part of their monthly loan repayments.
Calculate extra monthly cost of capitalising Lenders Mortgage Insurance
Work out the extra monthly costs of capitalising Lenders Mortgage Insurance, this will help give the borrower a better idea of how little extra they will be paying.