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Most banks and financial institutions that lend you more than their normal lending margins require Lenders’ Mortgage Insurance. HomePath requires Lenders’ Mortgage Insurance if we lend you more than 80% of the value of the property. The cost of this is added to the loan.
Essentially Lenders’ Mortgage Insurance gives you the opportunity to purchase a property with a smaller deposit.
Lenders' Mortgage Insurance protects the lender (not you, the borrower) should you default and the property is sold for less than the outstanding amount on the loan. You remain liable for any amount owing under the contract even if the mortgage insurer has paid that amount to the lender.
Even though it is the lender who is the beneficiary, it is you who pays the one off insurance charge.
If you repay your loan within a 2 year period, you may be eligible for a partial refund of the lenders’ mortgage insurance charge.
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