Lenders mortgage insurance (LMI) premiums are payable in two ways: as an up-front fee or by capitalisation.

Capitalising your LMI premium essentially means adding it to the total loan amount and paying it off in regular instalments with your home loan. This will mean you are also paying interest on the LMI for the life of the home loan, so are likely to pay more. Capitalisation is the most common way of paying for LMI.