Contrary to what many borrowers may think, Lenders Mortgage Insurance (LMI) does not protect the borrower should they be unable to make mortgage repayments. Instead, LMI protects the lender from any losses resulting in the sale of a property due to default by the borrower. LMI premiums are payable by the borrower when the amount borrowed is above a certain percentage, usually 80% of the lender’s valuation of the property. Some lenders will allow you to add the LMI premium (capitalisation) to your home loan whilst others require you to pay it up-front.