Is LMI the same as mortgage protection insurance?

No. These are two completely different products. LMI protects the lender if you default. Mortgage protection insurance is an optional product that protects you — the borrower — by covering your repayments if you lose your income due to illness, injury, or redundancy.

Do I get my LMI refunded if I sell the property?

Generally, no. LMI premiums are non-refundable once your loan is settled. Some older policies had partial refund provisions, but most current LMI products do not offer refunds regardless of when you sell or refinance.

Does LMI transfer to a new lender if I refinance?

No. LMI is not transferable. If you refinance to a new lender and your LVR is still above 80%, you may be required to pay a new LMI premium with the new lender.

Can I claim LMI as a tax deduction?

For investment properties, LMI may be tax deductible — but it is typically deducted over the shorter of 5 years or the loan term, not in a single year. For owner-occupied properties, LMI is not tax deductible.

What happens to LMI if I pay down my loan below 80% LVR?

Nothing — you do not receive a refund, but you also do not pay any additional LMI. Once paid, the LMI obligation is complete regardless of how much you subsequently pay off your loan.

What is LMI and how do you avoid it?

LMI can add thousands to your home loan. Learn what Lender's Mortgage Insurance is, when it applies, and 4 strategies to avoid paying it in Australia.