We have an IP which we have sold and settlement is next week. We have had it just under 2 years and paid LMI when we purchased it. Wondering if a portion of the LMI would be refunded since we only had it a short time?
Can LMI be refunded upon sale?
- Thread starter nettinpete
- Start date
LMI refunds, the fairytail.
Once apon a time, in the land of Nod, some lenders were gracious enough to bestow a refund of up to 40% of the LMI premium to their vassals should they sell the property within 2 years.
The vassals would celebrate and toast the lender in thanks.
Then did come come the dark days of the GFC. The lenders became cruel and the mortgage insurance masters were more evil still. No longer were they generous and forgiving. LMI refunds were taken aback and where they were granted by the insurer, the wicked lenders kept the gold for themselves.
But far worse, despite all the selfishness of the lenders and their insurer masters, the evil hordes took it upon themselves to increase premiums even further, thus enslaving the vassals forever.
And sadly, so it is unto this day.
Translation:
Occasionally lenders used to give limited refunds, but that's become myth and legend. It doesn't happen any more.
Once apon a time, in the land of Nod, some lenders were gracious enough to bestow a refund of up to 40% of the LMI premium to their vassals should they sell the property within 2 years.
The vassals would celebrate and toast the lender in thanks.
Then did come come the dark days of the GFC. The lenders became cruel and the mortgage insurance masters were more evil still. No longer were they generous and forgiving. LMI refunds were taken aback and where they were granted by the insurer, the wicked lenders kept the gold for themselves.
But far worse, despite all the selfishness of the lenders and their insurer masters, the evil hordes took it upon themselves to increase premiums even further, thus enslaving the vassals forever.
And sadly, so it is unto this day.
Translation:
Occasionally lenders used to give limited refunds, but that's become myth and legend. It doesn't happen any more.
That's true - perfect scenario for them. Unfortunately for all of us - no refunds/transfers in this scenario...
I'm not sure that its all so rosy for their industry though - in the middle of a boom where delinquencies are at all time lows, great. But that'll pass soon enough and the carry large asset quality risks on their balance sheet (admittedly its likely to be transferred out). Valuable part of the financial system.
Cheers,
Redom
If it is, then on your passing you will be declared a saint.
I believe it was written in the book that a miracle such as this was only once performed on a hillside in front of forty people. These same people then went straight home when they were told the next miracle would be the raising the dead....they had obviously seen enough.
I believe it was written in the book that a miracle such as this was only once performed on a hillside in front of forty people. These same people then went straight home when they were told the next miracle would be the raising the dead....they had obviously seen enough.
But if the LMI is for a rental the residual left becomes deductible on the termination of the loan. ie after 2 years you may have a deduction for 3/5th of the premium and other borrowing costs.
Its more likely your lender will also impose a fee for paying out the loan early. I had a client (Wpac) who hit him with a $750 deferred application fee because he sold the IP within the first 5 years. I cant say I have ever seen a borrower pay $750 so that is a rort. In the loan contract but a rort.
Its more likely your lender will also impose a fee for paying out the loan early. I had a client (Wpac) who hit him with a $750 deferred application fee because he sold the IP within the first 5 years. I cant say I have ever seen a borrower pay $750 so that is a rort. In the loan contract but a rort.
Was the loan pre 2009? These type of arrangements used to exist in the past, restricting mobility between lenders.
I thought the Rudd government got rid of exit fees for loans? Part of creating more competition in our mortgage market.
Yes, now they are called 'discharge fees' for the lender's legal work in attending to the discharge of mortgage - but would be much less than in the past. I can recall exit fees of 1% for instance.
Its not an exit fee. Its the application fee that was deferred. ie a penalty for making the bank not make as much money as they planned. Now its triggered. All as a result of the Rudd changes. Sure they ended exit fees and those ones that were sometimes a %. But they didn't prevent costs being deferred or based on exit costs.
The client also had to pay for mortgage discharge costs.. It was $250. Higher than for registration of a mortgage ($104.50)
Banks can call a fee thirty different names. And probably even make it sound like they are paying you.
Imagine that you enjoy the meal at a restaurant. So they charge you more when you don't drink. Or just have one dish. That's how monthly fees work. If airlines could charge by the kilo or for cubic volume of passengers and luggage they would be like our banks.
The client also had to pay for mortgage discharge costs.. It was $250. Higher than for registration of a mortgage ($104.50)
Banks can call a fee thirty different names. And probably even make it sound like they are paying you.
Imagine that you enjoy the meal at a restaurant. So they charge you more when you don't drink. Or just have one dish. That's how monthly fees work. If airlines could charge by the kilo or for cubic volume of passengers and luggage they would be like our banks.
Lenders are allowed to charge a reasonable processing fee when discharging a mortgage. There is a legal process that the lenders have to follow and they pass on the costs for this.
It usually costs between $160 to $400. It applies at any point in the life time of the mortgage (from 1 day to 30 years).
Lenders are not allowed to charge penalties for existing the mortgage early, outside of what would be considered reasonable costs.
This means they can't charge you a percentage cost or a fee for exiting the loan within 5 years of opening it. They can however pass on the costs for breaking a fixed rate loan contract.
It usually costs between $160 to $400. It applies at any point in the life time of the mortgage (from 1 day to 30 years).
Lenders are not allowed to charge penalties for existing the mortgage early, outside of what would be considered reasonable costs.
This means they can't charge you a percentage cost or a fee for exiting the loan within 5 years of opening it. They can however pass on the costs for breaking a fixed rate loan contract.
I haven't looked at the relevant legilsation but believe this would not be possible for a post 2009 loan.
