LMI vs LVR

[RomeoBuyHouses]

Hi SS gurus,

First post, long time "observer", first time poster

I've got a newbie question on LMI since I'm not quite clear on how is it affecting my loan based on what I read on the internet. I'm saving to buy my PPOR and trying to get incorporate LMI into my calculation.

My question is: Is LMI affecting the LVR of my loan?

For example: If the property value is 100k and if I were to borrow 90k from the bank, does the LVR calculated as:
a. (90k + LMI) / 100k OR
b. 90% (90k/100k), but my loan amount would be 90k + the LMI.

Thanks in advance

 

[Terry_w]

Depends whether you pay the LMI or capitalise it into the loan.

Probably it would go onto the loan based on your post. so you might end up at 92% LVR.

 

[RomeoBuyHouses]

Depends whether you pay the LMI or capitalise it into the loan.

Probably it would go onto the loan based on your post. so you might end up at 92% LVR.

Thanks for the very quick response.

I'm pretty new to property market, but is there a way to capitalise it without having it counted against the LVR?

 

[Terry_w]

Thanks for the very quick response.

I'm pretty new to property market, but is there a way to capitalise it without having it counted against the LVR?

Short answer - No.
Long answer Nooooooo.

but you could borrow else where.

 

[Jamie M]

For example: If the property value is 100k and if I were to borrow 90k from the bank, does the LVR calculated as:
a. (90k + LMI) / 100k OR
b. 90% (90k/100k), but my loan amount would be 90k + the LMI.

Thanks in advance

Hi there

Some banks would just go off the base loan amount and consider it be a 90% LVR with LMI added on top. They will credit the score as if it's a 90% lend and will assign the rate applicable to their 90% loans.

However - some lenders (Mac, Nab, AMP and others) would consider this to be a 92% loan and would credit score accordingly (more harshly) and will load the rate (they charge more for loans higher than 90%)

Hope that helps.

Cheers

Jamie