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Lenders Mortgage Insurance
When your deposit is under 20% of the purchase price, most banks insure the mortgage with an insurance company. All lenders either insure the mortgage and charge an LMI premium or alternatively take on the risk themselves and charge a 'Low Equity Fee'. The fees are calculated on a sliding scale, with the lower your deposit, the higher the LMI fee. Fees typically range between 0.5% and 1.5% of the loan amount. The premium is a one-off fee, and can usually be added to the loan amount.
