LMI fact sheet will provide greater education for borrowers - Genworth
Mortgage insurer Genworth Financial has supported a government move to introduce a fact sheet to educate homebuyers on home loans with lenders mortgage insurance (LMI).
The announcement comes on the back of the Government's bank competition reform package, and will provide greater transparency and education for borrowers, said Genworth.
Genworth said the mandatory fact sheet could be similar to the Government's key fact sheet for home loans, and could be handed out to lenders just prior to borrowers signing their home loan contract.
"Genworth believes it is important that homebuyers know how LMI works and the benefits it offers, plus their potential rights in relation to existing refund schedules if they switch home loans," Genworth CEO and President, Ellie Comerford said.
"We also support Treasury's findings and the Government's decision to rule out the introduction of a scheme to allow the transfer of LMI between lenders," she said.
As part of the fact sheet, Genworth said borrowers should be made aware of the reason that LMI is required by a lender, and the cost of insurance - which is most often spread over the entire term of the loan.
Genworth said home buyers should also be made aware that discounted mortgage insurance at the outset of the loan may be provided instead of a refund.
In a consumer survey conducted in June, Genworth found more than two-thirds of Australian borrowers agree that LMI is a helpful product for first home buyers.
"At a time when the dream of owning a property looks increasingly unattainable, risk products such as LMI insurance are helping aspiring homebuyers buy a home sooner," Comerford said.
"Consumers value that LMI is a community priced product, meaning that borrowers who take out loans pay the same amount whether they live in, for example, Western Sydney, Brisbane or regional Australia."
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