LMI reimbursement question

From: Tony Dixon


Howdy,

I have some questions regarding LMI.

We have just moved into our newly built PPOR and we paid LMI due to a small deposit.

We've built in an area that has experienced strong capital growth over the past 15 months and is about 5km from the Perth CBD.

Some months ago I spotted a comment on the forum about being the possibility of being reimbursed LMI after a revaluation of the property, but I can't recall the details, and it's possible that I misinterpreted the comments.

So my questions are:

Is it true? Can we get all or a fraction of the LMI premium back within a small time frame?

Or is only just in the case of selling the property, where the risk no longer exists.

If reimbursement is possible, is it just a case of getting a favourable valuation such that (mortgage/value) < 80%?

The bank is Westpac.

cheers, Tony
 
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Reply: 1
From: Rolf Latham


Hi Tony

If the lender agrees that the value of the property is now 80 % of the maximum loan limit and the LMI was paid within the last 12 months you can usually get some back.

Over 12 months not to my experience

Ta

Rolf
 
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Reply: 1.1
From: Tony Dixon


Rolf wrote:
>If the lender agrees that the
>value of the property is now
>80 % of the maximum loan limit
>and the LMI was paid within
>the last 12 months you can
>usually get some back.
>
>Over 12 months not to my
>experience

Thanks Rolf!

Music to my eyes/ears (and joy to my wallet).

Regards, Tony
 
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Reply: 1.2
From: Richard Hunt


Tony,

Lenders use a variety of insurance companies to cover their risk so each lender may have a different LMI refund policy (eg. see Rolf's example above).

My understanding of Westpac policy is that it will consider a refund of up to 40% of the LMI premium where a loan is actually paid out within 12 months. But don't expect them to come knocking at your door with a cheque - where talking about banks here!!!

As for reduced LVR as a result of capital growth, I don't believe Westpac entertain any refund policy. The reason being, say Bondy moves into your neighbourhood and values plummet (god forbid), the risk originally insured against is still present.


Cheers
Richard
 
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Reply: 1.3
From: Glenn Mott


Hi Tony,

Upon buying my first prop in 1994 with a $5000 deposit and a heap of LMI
through a loan with ANZ, the bank said that if I could get the loan down to
a level that would have precluded the use of LMI within 12 months, the LMI
insurers would refund part of the premium. I fixed the interest rate for the
first 12 months @ 8.5% and set the repayments at a level that would
facilitate the LVR being 80% at the end of that period.

Upon the 12 months passing by, I contacted the bank and was advised to send
a letter to the insurer with copies of my loan statements, which I did.
Within 7 days, I had a cheque in my hand for around 50% of the premium.

It's funny, I think back to a guy who was a quasi-mentor, having retired @
around 45 years of age after selling his accounting practice but keeping his
substantial commercial and residential property portfolio. He advised me to
borrow double the amount ($165,000), adding that in years to come I would
look back and wish I had...he was right!! All sectors of the economy were in
decline and I believe we were suffering from recession. It was a property
"gloom" time yet I did know it, and worse still, did not know that I was
buying a strata titled unit 30km from Perth's CBD for more than you could
buy 3 bedroom houses on 800sqm 10km from the CBD. Still, we live and learn
and I have learnt my lessons.

Good luck Tony.

Regards

Glenn


-----Original Message-----
From: propertyforum Listmanager
[mailto:listmanager@bne003w.webcentral.com.au]
Sent: Friday, 30 August 2002 12:00 PM
Subject: LMI reimbursement question


From: "Rolf Latham" <rlatham@asapfinancial.com.au>

Hi Tony

If the lender agrees that the value of the property is now 80 % of the
maximum loan limit and the LMI was paid within the last 12 months you can
usually get some back.

Over 12 months not to my experience

Ta

Rolf



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Reply: 1.3.1
From: Tony Dixon


Thanks for your comments Richard & Glenn.

I may not get anything back after all, but I will certainly try!

cheers, Tony
 
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Reply: 1.3.1.1
From: Rolf Latham


Hot news :eek:)

Just received update policy from ANZ this afternoon.

LMI refinds are only applicable to loans paid out in full in the first year..........the refund which consists of 40 % of the customer contributed premium ........ if the the calculated refund is lesss than 200, no refund is payable.

Wait for everyome else to follow ?

Ta

Rolf
 
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Reply: 1.3.1.1.1
From: Ian Parham


'Evening All

The subtlety was almost there Richard....careful ;>)

Ian
 
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