Another Mortgage Insurance Q !

[PIppety]

Hi there,

I was just curious. Our first IP was purchased with MI and now it is well under 80% LVR. Do we need to do anything to have the property "released" by the mortgage insurer ?

If so, would re-valuation be required ?

Thanks
PIppety

 

[geoffw]

PIppety,

There were some posts on this in the old forum. I can't find it now. But I seem to remember that

1. There was no refund unless you pushed. And even then it depends on the bank.

2. I thought it was only for a maximum of one year afterwards.

 

[PIppety]

Hi Geoff

Not really worried about a refund but just wanted to end my association with the Mortgage Insurer. (ie. Make sure they no longer have an involvement in my finances).

PIppety

 

[geoffw]

Pippety,

My understanding was that the MI company only had a hand in your finances if you defaulted.

I hope that's not what you're planning?

 

[PIppety]

Geoff,

Not planning on it ! hehehe

I suppose it's a case of who would you prefer to deal with - the Bank or the Mortgage Insurer ( Satan or the devil ! lol)

PIppety

 

[Rolf Latham]

Hi PI

Your loan will remain insured usually for the term of the loan, sometimes for only a fixed period.

The LMI provider has NO relationship with your loan and you.

LMI will protect the lender where they suffer a loss due to a default by you AND the property sold does not cover the outstanding loan and costs.

Note just because your place is now valued at 80 % of the loan, doesn not mean the insurer may never have to pay out.

If you go belly up and the market goes to custard, then a fire sale may not cover the money owed (incl added default interest and recovery costs).

This is one of the primary reasons why LMI refunds on reduced LVRs only are uncommon.

Ta

rolf

 

[PIppety]

Rolf,

Thanks for your help. Good to understand it a bit better.

Cheers
PIppety