Australia Mortgage Insurance, Mortgage Insurance Australia, Australian Mortgage Insurance

By: EconomyWatch   Date: 26 May 2010

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Australia mortgage insurance covers lenders against losses suffered when a borrower defaults on a mortgage loan. A borrower should purchase mortgage insurance Australia to prevent lenders from taking possession of his/her mortgaged item.

Types of Australia Mortgage Insurance

Australia mortgage insurance can be of two types, public and private. The type of mortgage insurance one buys depends on the insurance cover required and other needs of the policyholder.

A person can opt for public mortgage insurance Australia when s/he needs a loan higher than 80% of his/her property's value and has limited equity at his/her disposal. The premiums are paid by the lender on behalf of the borrower to protect his/her interest in case the borrower defaults on payments.

Private Australia mortgage insurance is typically bought when the loan payback amount is below 20%. The policyholder can pay the premiums for this kind of insurance policy monthly or annually, or a combination of the two. This insurance is also called lender’s mortgage insurance (LMI) in case the loan is taken for the purpose of buying a property. Although this policy is bought by the person taking the loan, it gives protection to the party from whom the loan has been taken.

The advantage of lender’s mortgage insurance Australia is that a person can buy a house whenever s/he wants without waiting for large amounts to accumulate in his/her bank account. This kind of insurance policy is extremely helpful in times when property prices are rising.

Little Known Facts about Australia Mortgage Insurance

Many people in Australia refinance their mortgages with another insurance provider to reduce the premium. However, people who have borrowed more than 80% of their property's value are eligible for several other bonuses, most of which they are not even aware of:

  • If the loan is repaid within two years of taking it, the insurance company can refund the premiums paid over this period for lender’s mortgage insurance.
  • If a loan amount exceeds a lending valuation ratio (LVR) of 80%, the borrower has the option of paying a onetime insurance premium.

    • The knowledge of these bonuses would help policyholders take appropriate actions to receive the maximum benefit.


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