From: Ian Findlay
Hi all,
Can anyone advise how lenders mortgage insurance is calculated.
For example if property value is $150,000
80% LVR ($120k) = no insurance.
However if 90% LVR ($135k) with an insurance premium of 1%. Does this mean 1% on the total $150k ($1500) or 1% only on the 15k difference ($135-120=15) i.e. $15?
In the UK it is only on the difference as the banks are happy with the original 80% but get the lender to pay for insurance for the difference so they get their money regardless in case of default.
However I've been told that all banks in Australia calculate it on the total value i.e. $1500 in the example above - is this true?
Ian
Hi all,
Can anyone advise how lenders mortgage insurance is calculated.
For example if property value is $150,000
80% LVR ($120k) = no insurance.
However if 90% LVR ($135k) with an insurance premium of 1%. Does this mean 1% on the total $150k ($1500) or 1% only on the 15k difference ($135-120=15) i.e. $15?
In the UK it is only on the difference as the banks are happy with the original 80% but get the lender to pay for insurance for the difference so they get their money regardless in case of default.
However I've been told that all banks in Australia calculate it on the total value i.e. $1500 in the example above - is this true?
Ian
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