QBE Lenders Mortgage Insurance: Everything You Need to Know

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Are you planning to buy your dream home, but don’t have enough cash for a deposit? In that case, you might need to take out Lenders Mortgage Insurance (LMI) to secure your home loan. QBE is one of the most popular LMI providers in Australia, and in this article, we will provide you with everything you need to know about QBE LMI.

What is Lenders Mortgage Insurance?

Lenders Mortgage Insurance (LMI) is a type of insurance that protects your lender in case you default on your home loan. If you don’t have enough deposit to secure your home loan, LMI is usually required by the lender to mitigate their risk.

In Australia, most banks and lenders require LMI if your deposit is less than 20% of the property’s value. The cost of LMI is usually added to your home loan, which means you will pay interest on it for the life of the loan.

Who is QBE?

QBE Insurance Group is one of the largest insurance companies in Australia, with operations in more than 30 countries worldwide. QBE LMI is a division of QBE Insurance Group that provides LMI to Australian lenders and borrowers.

What does QBE LMI cover?

QBE LMI covers your lender in case you default on your home loan. If you default, your lender can make a claim to QBE for the outstanding amount of the loan. QBE will pay the lender the amount of the claim, and then seek to recover the amount from you.

QBE LMI also covers you as a borrower in case you are unable to make your mortgage payments due to unforeseen circumstances such as unemployment, illness or injury. In that case, QBE may provide you with a payment holiday or a reduced repayment plan to help you get back on your feet.

How much does QBE LMI cost?

The cost of QBE LMI depends on several factors, including the value of the property, the amount of the loan, and the size of your deposit. As a general rule, the lower your deposit, the higher the cost of LMI.

You can use QBE’s online LMI calculator to get an estimate of the cost of LMI for your particular situation. Keep in mind that the cost of LMI is usually added to your home loan, which means you will pay interest on it for the life of the loan.

How do I apply for QBE LMI?

If you are borrowing from a lender that uses QBE LMI, you don’t need to apply for LMI separately. Your lender will arrange the LMI on your behalf and add the cost to your home loan.

If you are a broker or a lender who wants to use QBE LMI, you can contact QBE directly to apply for LMI. QBE has a dedicated team of professionals who can help you with your application and answer any questions you may have.

What are the benefits of QBE LMI?

There are several benefits of using QBE LMI:

  • QBE LMI allows you to buy a home with a smaller deposit, which means you can get into the property market sooner.
  • QBE LMI can help you avoid paying Lenders Mortgage Insurance Premiums (LMIPs), which can be expensive and add to the cost of your home loan.
  • QBE LMI offers flexible repayment options and payment holidays in case you are unable to make your mortgage payments due to unforeseen circumstances.
  • QBE LMI provides peace of mind to both borrowers and lenders, knowing that the loan is protected in case of default.

What are the risks of QBE LMI?

Like all insurance products, QBE LMI comes with some risks:

  • The cost of LMI can be significant, especially if you have a small deposit.
  • If you default on your home loan, you will still be liable for the outstanding amount of the loan, plus any fees and charges that may apply.
  • QBE LMI may not cover all of your losses in case of default, especially if the property value has dropped significantly since you took out the loan.

Conclusion

QBE Lenders Mortgage Insurance is a popular product that allows borrowers to buy a home with a smaller deposit. It provides peace of mind to both borrowers and lenders, knowing that the loan is protected in case of default. However, the cost of LMI can be significant, and borrowers should carefully consider their options before taking out LMI. If you are unsure whether QBE LMI is right for you, speak to a mortgage broker or financial advisor who can provide you with expert advice.