Lender's Mortgage Insurance or LMI is a type of insurance policy that the lender takes out to protect them if you should ever have a problem repaying your loan.

The insurance does not protect you, and you may have to pay for the policy. If there is a problem the insurer will then sell your home and recover as much as they can, but if there is a shortfall you will still have to pay the difference.

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Some lenders or banks take out a policy for every loan, and some only for loans of more than 60% or 80% of the property value. The insurers also have their own guidelines that you have to meet.

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