LMI question

From: Danny Dwyer


Can anyone explain to me "in layman terms", how do to work out LMI calculations? Is there a set formula that one to use as an estimate of the LMI that will be required when the LVR is over 80%? Does this amount depend on various insurance companies? Who are these companies? Jan S. indicated in her new book that the Mortgage Insurance can be up to 2%.

Danny D.
 
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Reply: 1
From: Rolf Latham


Hi Danny

Lmi Premium %tages vary accoridng to the following:

1. The amount of the loan, more than 300 k and the rate increases by around 50 %
2. Whether the loan is P&I or I/O
3. Which insurer is being used (yes there is some competition )
4. The state you are in varies the stamp duty on the premium
5. Whether the LMI premium is capitalised or paid direct.

The highest premium exceeds 3 %, based on a 450 k I/O loan with capitalised premium.

Ta

Rolf
 
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Reply: 1.1
From: Danny Dwyer


Thanks Rolf,

Just out of curiosity who are the insurance companies these days that take the LMI money from us? Are they big well known companies?
 
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Reply: 1.1.1
From: Rolf Latham


Hi Danny

There are Four majors

1. PMI
2. Royal Sun Alliance
3. Western Lenders Mortgage Insurance
4. General Electric

Many BANKS also self insure if they see fit, where either the risk is minimal, or they cant get LMI for the borrower but they think the risk is ok.

Ta

ROlf

Rolf
 
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