Refinancing to Remove Lenders Mortgage Insurance (LMI)
Lenders Mortgage Insurance (LMI) is one of the largest upfront costs many homeowners pay when buying a property with a smaller deposit. While LMI can help you get into the market sooner, many borrowers don’t realise that refinancing can sometimes remove LMI altogether. Understanding how refinancing can remove lenders mortgage insurance helps homeowners avoid paying unnecessary costs for longer than needed.
What Is Lenders Mortgage Insurance?
Lenders Mortgage Insurance is a one-off premium charged when you borrow above a certain loan-to-value ratio, typically above 80%.
It protects the lender — not the borrower — in case the loan defaults.
Why Many Borrowers Pay LMI Initially
For many first home buyers and borrowers with limited deposits, LMI allows earlier access to the property market.
While it increases upfront costs, it can be a strategic trade-off when property prices are rising.
How Property Value Growth Can Change LMI Requirements
Over time, property values may increase while your loan balance decreases.
This can reduce your loan-to-value ratio, potentially bringing it below the LMI threshold.
When Refinancing Can Remove LMI
If your loan-to-value ratio is now at or below 80%, refinancing to a new lender may allow you to avoid paying LMI again.
This can result in significant savings, especially for larger loan balances.
Why Staying With Your Current Lender May Not Remove LMI
LMI is usually paid upfront and cannot be refunded by your existing lender.
In many cases, refinancing to a different lender is required to take advantage of a lower loan-to-value ratio.
The Role of Valuations in Removing LMI
A new lender will usually order a valuation as part of the refinance process.
The outcome of this valuation is critical in determining whether LMI can be avoided.
Risks of Assuming LMI Is Automatically Removed
Not all refinances eliminate LMI, even if you believe your property has increased in value.
Incorrect assumptions can lead to unexpected costs or delays.
Why This Matters for Australian Homeowners
LMI premiums in Australia can run into tens of thousands of dollars.
Removing the need for LMI through refinancing can materially improve long-term loan costs.
How The Finance Brokers Help Remove LMI
The Finance Brokers assess whether refinancing can eliminate LMI based on property value, loan balance, and lender policy.
They coordinate valuations and compare lenders to ensure refinancing delivers genuine savings.
Are You Still Paying the Price for LMI?
If you paid LMI when you first bought your pr
