LMI question

[yadreamin]

Hi All
I have a young friend about to purchase a home PPOR
He is putting in 80k deposit and borrowing 420k
has a good job and good credit history and no other debt.
Should he pay LMI?
if so why?
any tips at all are apreciated
cheers

 

[Aaron_C]

He has to pay LMI because he is borrowing more than 80%...it is the law. Some banks can waive it up to 85% (like westpac) but only if you are a strong borrower like a doctor etc

 

[yadreamin]

Thanks Aaron
I just counldnt remember the 80% rule
cheers

 

[Rolf Latham]

He has to pay LMI because he is borrowing more than 80%...it is the law.

Meh, not quite "law"

the lender needs to have a higher capital reserver for that loan.

WHich means their fractional banking margins shrink, and they dont like that.

Some lenders are still doing 90 % no LMI lends on the quiet for many folks, whom as you say need some form of strength in the deal.

Ta

rolf

 

[Rolf Latham]

Hi All
I have a young friend about to purchase a home PPOR
He is putting in 80k deposit and borrowing 420k
has a good job and good credit history and no other debt.
Should he pay LMI?
if so why?
any tips at all are apreciated
cheers

Hi

A lot of stuff needed to help here but lets start with

What is the LONGER TERM purpose of the property ?

What is a GOOD job ?

ta
rolf

 

[Aaron_C]

Meh, not quite "law"

the lender needs to have a higher capital reserver for that loan.

WHich means their fractional banking margins shrink, and they dont like that.

Some lenders are still doing 90 % no LMI lends on the quiet for many folks, whom as you say need some form of strength in the deal.

Ta

rolf

That is correct. I was just writing the simple, easy to explain answer to his question