Is 90% LVR possible without Mortgage Insurance
- Thread starter thunderbolt
- Start date
As in all marketing you will find a little hook in there .............a risk fee of some sort which may not be a whole lot less than traditional LMI
This is a similar concept to INGs 95 % new ref
In the end, one needs to see what works best
ta
rolf
dont hold ur breath, u might go as blue as your avatar
although there is some releasing of policy on the surface, the current underwriting standards are stillmuch tougher than pre gfc days
ta
rolf
ahaahah, true- so far no problems...but it's only been 3-4 weeks
Rixter - i havn't used ING 95% REF yet...but from their old Ref you saved around $6,000 on LMI for LVR btw 80-82 and btw 82-85 you saved around $4,200
So im guessing a 90%+ LVR wont save you much....still a saving but could be more
Regards
Michael
Had a 95% REF deal approved this week with ING. Substantial saving for the client.
There is a little catch for the agressive investor with REF...
... it's not LMI.
Say you purchase a property using LMI at 90%. You get some capital growth and then you want to increase the loan back to 90% of the new value to get some cash for in investment. In this scenario you pay more LMI on the increase only (not a whole new policy). This increase usually only costs a few hundred, not thousands of dollars.
In the same scenario with REF, so save some money upfront. When you increase the loan, sometimes the customer may no longer qualify for REF. As a result you now have to take out a new LMI policy over the entire loan. LMI needs to be paid on the full loan, not just the increase. You end up paying for it about 1.7 times instead of 1.1
This doesn't happen to everyone. REF is a great product with substantial savings, but it's not suitable to all circumstances.
There is a little catch for the agressive investor with REF...
... it's not LMI.
Say you purchase a property using LMI at 90%. You get some capital growth and then you want to increase the loan back to 90% of the new value to get some cash for in investment. In this scenario you pay more LMI on the increase only (not a whole new policy). This increase usually only costs a few hundred, not thousands of dollars.
In the same scenario with REF, so save some money upfront. When you increase the loan, sometimes the customer may no longer qualify for REF. As a result you now have to take out a new LMI policy over the entire loan. LMI needs to be paid on the full loan, not just the increase. You end up paying for it about 1.7 times instead of 1.1
This doesn't happen to everyone. REF is a great product with substantial savings, but it's not suitable to all circumstances.
What's the definition of substantial savings Peter?
About 40% discount on a normal LMI premium.
Thanks everyone for all the responses, I have decided to stay with which bank for now and leave the guarantee in place. Parents have plans to sell the property securing it, but not for another 12 months or so, will see what happens then, I would like to stay with them due to family connections giving me a lot more leverage than I otherwise would ever have had going to a new bank, however have a stable job and good income with no expenses due to company providing housing and car so thought if anyone was offering an attractive deal I would check it out.
Cheers
thunderbolt
Cheers
thunderbolt
Any idea of the insurance premium between 85-90% LVR?
If you use the Upfront buying costs calculator on the Westpac site it will show the insurance premium for the amount you're borrowing.
http://www.westpac.com.au/personal-banking/home-loans/tools-calculators-rates/
http://www.westpac.com.au/personal-banking/home-loans/tools-calculators-rates/
that is a broad question... depending on the LVR and loan amount, it varies from 0.85% to 2.21% at Westpac
thanks for that
You can use this mortgage insurance calculator to work out your premium.
Note that there are several things that can effect your final LMI premium:
Note that there are several things that can effect your final LMI premium:
- The state you are in will effect the stamp duty on your LMI premium.
- If you are a first home buyer some lenders will give you a 15% discount.
- If you don't have genuine savings then some lenders will charge you a higher premium.
- Lenders that have a risk fee such as ING's REF do not have stamp duty as they are not technically insurance.
- When a loan goes over $300k or $500k then the premium jumps up significantly.
- Shop around, there are big differences between lenders.
