LMI Rebate?

[MatC]

Recently got told one of the LMI insurers had done $50 mill on the gold and sunny coast in QLD last year because of falling property prices and repossessions. thus their lack of appetite up here.

Never managed to get a refund but Wetpac LMI policy insurers the borrower not the property so have managed to do a simultaneous settlement and port the loan and LMI to the new property. They would not hold a term deposit for one day so had to be the same day but saved the client thousands by doing this (loan amount and term did not increase). Not sure if Genworth or QBE do this but their are some strange things available if you ask the right questions

 

[Blacky]

I recently approached the bank about going into LMI territory - a first for me.

However, the cost came to something like $20-$30k for a $350k increase.

How is LMI actually calculated? Ive heard it is 2-5% (depending on a number of variables). but 2-5% of what? Seems more like 10% to me.

Im still considering it. I dont need the $$ for anything right now. So thinking I will sit and wait. But knowing I have the funds available if something pops up would be nice. If it was a $5-10k bill I would understand it, and probably take it. But $30k??? hmmm

Its with CBA.

Blacky

 

[D.T.]

Usually 2% of the total loan. Does the 300k increase put it up to 2mil or something?
Sounds like they might have been thinking of redoing a 2 or more loans blacky?

 

[Peter_Tersteeg]

LMI is calculated as a percentage of the loan amount. The percentage used is determined on the LVR and actual amount. There's tables of these values.

On top of that, stamp duty and GST are also applied.

If you're increasing by $350k but haven't paid LMI before, you'll be paying LMI on the entire loan amount, not just the increase.

If you've cross collateralised the portfolio, the LVR is calculated across the entire portfolio and LMI paid on the entire portfolio loan amount (a great reason not to cross collateralise).

 

[Blacky]

LMI is calculated as a percentage of the loan amount. The percentage used is determined on the LVR and actual amount. There's tables of these values.

On top of that, stamp duty and GST are also applied.

If you're increasing by $350k but haven't paid LMI before, you'll be paying LMI on the entire loan amount, not just the increase.

If you've cross collateralised the portfolio, the LVR is calculated across the entire portfolio and LMI paid on the entire portfolio loan amount (a great reason not to cross collateralise).

Yeah, the loans are currently crossed as they were done as one construction loan. Im untangling that now as we speak.
I guess thats why it is so high as Ill be paying the percentage on the total loan.

Once I have unthreaded it all I might re-fi one of the properties to another lender to get the additional equity out.

Cheers Peter.

Blacky