Lenders’ Mortgage Insurance is a policy which protects the lender against loss if the borrower defaults on the loan. If your deposit is less than 20% of the property’s value, and you do not have a loan guarantor, the lender is likely to insist on this insurance policy. Although the policy is designed to protect the lender – not the borrower – against loss, it is the borrower who has to pay the substantial premium cost, which may be more than $10,000. However, many lenders will agree to add the premium cost to the loan amount, so that it can be repaid gradually over the term of the loan.