Lenders who don't charge LMI?
- Thread starter mja
- Start date
Theres a lender called 'jumpstart' homeloans who do not charge LMI upfront, they load it into the exit fee, thats payable if you exit in the first 5 years. They do 98% LVR for owner occupied loans only. Interest rate 8.07%, $100 p/a ongoing and abot $1500 app fee. the interest rate falls after the 3 year.
Doing the sums, it is similar to paying LMI upfront for a 100% loan over 5 years. Some first home owners choose it as there is less overall deposit upfront. The old 'low down, easy pay' Robert Kiyasaki talks about...
There are a few other smaller lenders who load their interest rate instead of charging LMI upfront. And of course if you are a first homebuying member of the AMA the majors will forego LMI to 95%.
Doing the sums, it is similar to paying LMI upfront for a 100% loan over 5 years. Some first home owners choose it as there is less overall deposit upfront. The old 'low down, easy pay' Robert Kiyasaki talks about...
There are a few other smaller lenders who load their interest rate instead of charging LMI upfront. And of course if you are a first homebuying member of the AMA the majors will forego LMI to 95%.
Not exactly, they just have in-house MI instead of external ones, and I think all of them have re-insurance deals with the real MIs
The current capital retention requirements over 80% LVR for lenders means they will surely go for mortgage insurance. Some advertise no LMI by just hiding it under higher fees and rates.
9%+ interest rate for 90% LVR, thats way too high. I would rather go with a normal loan with LMI. At 90% LVR, the LMI should be in the 1-1.5% range and not really that significant. Given that you can get full featured loans for around 7.5% interest rate, the saving in interest for ONE year is enough to recover the LMI. So unless you have trouble getting loan approval from normal lenders, I would rather pay the LMI and get a lower rate.
Basel II is the new proposed rules and regulations that will government how lenders can lend out their money. In the current Basel I accord, lenders require to hold a certain percentage of capital for every dollar they lent out when the loan is above 80% LVR. Lenders have limited funds and they will like to lend out as much as possible for profit. If they get mortgage insurance, that capital retention is cut in half. So thats why all lenders pay mortagage insurance on 80%+ LVR loans, especially when it is the borrower that ultimately pays it. Of course, if they can get a lot more more money (eg. charging very high rates) than the cost of withholding that capital, of course they would waive LMI!
I haven't read Basel II in detail, but I think the capital retention requirement is gone or significantly changed. It is no longer a no-brainer to charge LMI on 80%+ LVR loans, instead it becomes an option. The big banks will still charge LMI since they are more conservative. But lending market is very competitve, so I am certain some lender will take up the risk.
If I remember correctly, Basel II will come into effect in less than a year from now
Basel II is the new proposed rules and regulations that will government how lenders can lend out their money. In the current Basel I accord, lenders require to hold a certain percentage of capital for every dollar they lent out when the loan is above 80% LVR. Lenders have limited funds and they will like to lend out as much as possible for profit. If they get mortgage insurance, that capital retention is cut in half. So thats why all lenders pay mortagage insurance on 80%+ LVR loans, especially when it is the borrower that ultimately pays it. Of course, if they can get a lot more more money (eg. charging very high rates) than the cost of withholding that capital, of course they would waive LMI!
I haven't read Basel II in detail, but I think the capital retention requirement is gone or significantly changed. It is no longer a no-brainer to charge LMI on 80%+ LVR loans, instead it becomes an option. The big banks will still charge LMI since they are more conservative. But lending market is very competitve, so I am certain some lender will take up the risk.
If I remember correctly, Basel II will come into effect in less than a year from now
Hi FelixL,
This is an inner city apartment in Brisbane (85sqm in size). I want the maximum lend I can get (for a line of credit), and two lenders have come back with a maximum lend of 70% LVR!
I'd love to pay LMI, but the two big mortgage insurers won't budge over 80% because it's inner city.
So, if I want my 90%, I have pay a higher interest rate. I notice a couple of lenders will do 95%, but with an interest rate of 11.5%!!!
Cheers,
-- MJ.
85 sqm is quite good size for apartments. Are you applying for low-doc loans? lenders and mortgage insurers normally don't reject 70% or 80% LVR loans.
If you apply for normal loans and they reject you at that sort of LVR, I would have seriously ? marks on the property, may be the lenders and insurers know something you don't?
If you apply for normal loans and they reject you at that sort of LVR, I would have seriously ? marks on the property, may be the lenders and insurers know something you don't?
Applying for full-doc...but asking for 90% lend. Not sure what the story is. I've got a feeling it might have something to do with lots of credit checks on my credit file...
-- MJ.
Thanks Qlds007 - the timing might be just right for a new MI player.
The feeling I get - and it may be unfounded - is that the mortgage insurers and banks change their policies, so THIS week I can't get a loan because of MI shernanigans, but next week I *might* be able to.
Oh well. Gotta play by the rules.
-- MJ.
The feeling I get - and it may be unfounded - is that the mortgage insurers and banks change their policies, so THIS week I can't get a loan because of MI shernanigans, but next week I *might* be able to.
Oh well. Gotta play by the rules.
-- MJ.
commbank at 90 or 95 % .
If it services and its over 50 sq metres youd be surprised what u can get though there................but yes there is a premium......
ta
rolf
If it services and its over 50 sq metres youd be surprised what u can get though there................but yes there is a premium......
ta
rolf
Unfortunately they are not interested in investing in electronic submissions due to the entry cost, so many lenders have already said they will not be using them. Paper based, manual assessments slow assessment rates down & are workload intensive for credit staff (both lending & MI).
The meeting i had in Brisbane during the week with a regional lender who was looking at taking them on board dont offer electronic submissions but their turnaround is considerably better than the majors that do.
Suncorp offer electronic submission but lets face you would never actually use them. There idea of fast is 14 days to acknowledge they received your application and between 28-30 days for a conditional approval.
Even if you are a member of their premier team it doesn get much better.
I have no problems in competition and think the market is just about ready for another serious MI player.
When you consider the insure more loans in the US than the 2 players in Oz put together they are no small fry.
Suncorp offer electronic submission but lets face you would never actually use them. There idea of fast is 14 days to acknowledge they received your application and between 28-30 days for a conditional approval.
Even if you are a member of their premier team it doesn get much better.
I have no problems in competition and think the market is just about ready for another serious MI player.
When you consider the insure more loans in the US than the 2 players in Oz put together they are no small fry.
I know this post is old but I share my experience.
I had a Brisbane CBD apartment which I was able to finance with 95% LVR with LMI. Used a broker to do it.
I know from that experience that there were two lenders that could do 95% LVR with LMI as I applied for both and picked one. Rolf already mentioned one and the other is Homeside.
I had a Brisbane CBD apartment which I was able to finance with 95% LVR with LMI. Used a broker to do it.
I know from that experience that there were two lenders that could do 95% LVR with LMI as I applied for both and picked one. Rolf already mentioned one and the other is Homeside.
perhaps but you have to bear in mind where lmi gets added on, or taken off as the case may be between the 2 lenders.
if its a 90%er then suppose this wouldnt be a massive issue and it would boil down to the deal available from each one.
Re the MI issues I tend to agree with RT, and further concur re suncorp.
if its a 90%er then suppose this wouldnt be a massive issue and it would boil down to the deal available from each one.
Re the MI issues I tend to agree with RT, and further concur re suncorp.
Looks like I didn't update this post.
In June 2007, I ended up removing our PPOR from ANZ and then asking what they'd lend me on a line of credit... 80% they said. Then I asked... "what about just topping up my offset account?".
They said they'd do 90%... 95% subject to application.
It was approved at 95%.
So, when the right cards are dealt, you can get 95% lend... even on an inner city apartment
In June 2007, I ended up removing our PPOR from ANZ and then asking what they'd lend me on a line of credit... 80% they said. Then I asked... "what about just topping up my offset account?".
They said they'd do 90%... 95% subject to application.
It was approved at 95%.
So, when the right cards are dealt, you can get 95% lend... even on an inner city apartment
