NAB and LMI...

E

Electro

Hey all,

Just a quick one regarding LMI.

Was messing around with some online calculators to get an idea of LMI premiums. Now I know out of these three examples NAB does not capitalise LMI. But for a $550000 purchase price and 95% LVR CBA and WPC quoted in excess of $20k for LMI while NAB quoted around $12.5k for first home or 14k for investment. Is there any truth to this?

Does NAB really charge a (significantly) lower LMI premium than the other big banks? Or would I never now until actually applying?
 
Hi Elecrotro

Thats about right

Most lenders that use QBE have the lower FHOG buyer premium and lenders like Bankwest even allow u to cap it ( or most of it depending on deal)

Not incl Stamps the approx premiums are

CBA 18 222
NAB 12 400
Bankwest 13 000

ta
rolf
 
Thanks for the quick reply Rolf.

This loan will be for my PPOR. I don't actually need to capitalize the LMI to be able to afford to buy - I've got excess cash which I'll just park in an offset for the time being so I don't really mind if I have to hand a chunk of it over upfront to the bank for LMI. It works out the same either way (or a little less with NAB due to reduced LMI cost) in terms of net interest payable per month.

I like what NAB currently has to offer ( but not because of their latest marketing ploy) and their product is suitable for my situation so this info will means there is another attactive option available to me.
 
all states have stamps, 5 to 10 % approx on the premium depending on locn and if u are FHOG etc

One thing to consider with your situation re the capping of the interest .....................what is your goal with the new ppor middle to long term.....2 to 15 years ?

Seemingly insignificant things can have a large impact. I have hear it called the "slight edge" principle.

ta
rolf
 
Rolf Latham said:
all states have stamps, 5 to 10 % approx on the premium depending on locn and if u are FHOG etc
Click to expand...

Sorry please excuse me for being slow but just to be clear, you are saying there is about a 5-10% stamp duty (in all states inc VIC) payable on top of the rough figures you quoted in your first post which is different to the usual stamp duty one would pay on the purchase? How does FHOG impact - Is it > or < usual if FHO?

Rolf Latham said:
One thing to consider with your situation re the capping of the interest .....................what is your goal with the new ppor middle to long term.....2 to 15 years ?

Seemingly insignificant things can have a large impact. I have hear it called the "slight edge" principle.

ta
rolf
Click to expand...

Goal is medium term at least >3yrs reassess situation then. What impact are you talking about specifically. After purchasing PPOR my aim is to purchase IP before years end. I have the funds now to buy PPOR and at least 1 IP but would like to settle in first and then reassess.
 
yup

more stamp duty :)

NSW 9 %

Vic/Wa/ACT/NT 10 %

Tas 8 %

SA 11 %

Qld Owner occ 5%

Qld Invest 7.5 %


Are u likely to turn the plac into an IP at all ?

ta
rolf
 
k

then it makes sense to take a deal that provides for max cap of lmi UNLESS the non cap deal is financially so much better on rate and fees.

The 13 k u rtain outside the property to be used for later non ded purchases may be worth quite a lot in Net Present Value terms. This is especially so if you are on a high taxable income bracket

ta
rolf
 
I hear ya...

My MB recommended the Bankwest Smart something or other and the NAB Choice. I really like the NAB product but I actually started off thinking I want to borrow as much as possible and hold onto max amount of cash as long as it's viable. But now am a little unsure if what to do.

Would you reccomend the same sort of thing?

My basic requirements were low rate (obviously) and 100% Offset, IO and maybe portability
 
Hi Electro

I dont know much about where you are at...................so the advice is very generalised, and id be much more inclined to say your broker knows what you need.

I always err on the side of caution and risk management.

If the product that allows me to borrow 97.5 % and allows me to hold back 2.5 % cash, AND doesnt cost me much more AND has similar features I would almost always suggest the 97.5 % lend AND and IO loan with 100 % offset to boot.


There are exceptions. One of those is clients that are hopeless with looking at money in the bank and have a need to spend. They will be better served with a 95 % lend and maybe even PI for a while........

ta
rolf
 
On the contrary... My attitude since very young is save before spend so this is a non issue. You have brought me back to my original plan/thinking though.

I think I have one more option which has been offered to me many times and that is to use my parents house as guarantee to avoid LMI but I'm not really keen on this tbh. Does NAB have this feature?

When is the guarantee removed? Is it when LVR gets to 80%? Can I pay to get it removed at a later date if for example they choose to sell?
 
Hi El

Yes NAB, Stg et al will do a family guarantee with limited guarantee.

We do them a lot............truthfully, I prefer them as a last resort though.

Why ? A primary reason is seen too many good relationships go pearshaped and then more people are in the couples troubles than ever needed to be.

Guarantee can be removed anytime you make the remnant LVR 90 % and pay LMI or remnant lvr 80 % wth no lmi

ta
rolf
 
I've just spoken with my MB and we've gone ahead and started a pre-app with Bankwest. I was advised to go for their Premium Select Home Loan.

Specs:
- 7.00% Interest Rate (0.7% off standard for life of loan)
- LMI of around $14k which will be capitalized
- 100% offset (where I have to pay $3.99 p/month for the linked transactional account)
- no application fee
- no ongoing fee
- no exit fee

My MB said this offer only came out within the last week or so. I think previously it was only for >$750k borrowing but they have now reduced that to $400k.
 
Last edited:
Hi

Hot off the press this am

The below confirms the 7.00

BWA are ok to deal with.

Just be aware .....................

Do NOT go to auction with their pre approval or exchange contracts on private treaty wothout a formal approval in place.

Their system will spit out a Pre approval on the spot, and they wont take this to LMI until u get a contract.............



ta
rolf




Great New Offering from Bankwest effective TODAY - Wednesday 2/3/2011 until Friday 27th May 2011.

You can offer your clients No Application fee, No Monthly fee, No Annual fee and rates for 6.80% ongoing discounted variable rate

No application fees across all products at all available LVRs (excludes
Equity Release & Lite Plus home Loan)


Premium Home Loan (7.10%) available with aggregate lend under $300,000
provided that they take a Transaction Account. (Lite Direct, Hero or
Zero)
For Premium Select (7.00%) minimum aggregate borrowings now $400,000.
The minimum loan size now just $20,000.
Great new discounted pricing on our Premium Select Home Loan: - Pro Pack
pricing without the annual fee!

(Embedded image moved to file: pic10780.gif)

Premium Select Offers:
FREE online redraw to a Bankwest account - no minimum $ redrawn Optional 100% offset account at $3.99 per month - Eftpos, ATM, Mastercard debit card available I/O up to 5 years Minimum loans split $20,000 and up to 5 splits Up to 95% plus LMI for purchase with 5% Genuine Savings Up to 95% plus LMI for construction with 5% Genuine Savings Up to 90% plus LMI for refinances and purchases without genuine savings No Monthly or Annual fees on home loan or loan splits
 
Rolf Latham said:
Hi

Hot off the press this am

The below confirms the 7.00

BWA are ok to deal with.
Click to expand...

Thanks for the confirmation.

Just be aware .....................

Do NOT go to auction with their pre approval or exchange contracts on private treaty wothout a formal approval in place.

Their system will spit out a Pre approval on the spot, and they wont take this to LMI until u get a contract.............
Click to expand...

How would this work?
So if I were to go to auction I would actually have to get formal approval first? How would I do this?
 
there is a way to do it, but its not sensible..........

If you believe you will go to auction use a lender where you can at least eliminate a few things beforehand.

Lenders such as NAB, CBA and WBC as a few examples will run a proper preapproval ( via broker channel at least) which will have been through the area that runs the LMI, and you can reasonably rely on YOUR issues having been checked and accepted.

In any case, you still tun the risk of the property issues not being accetable, so make good use of your broker to make sure that they provide some form of desktop val before bidding ( not reliable but at least provides a sanity check) and see if there are any property specific issues......examples are

1. Size of units over the min
2. more than one dwelling on the one title
3. Postcode locn

etc

ta
rolf
 
Precisely why I hate auctions and would avoid if at all possible.

Too difficult and confusing. Nevertheless I will be trying to put an offer down before auction but make it subject to finance for my protection. Of couse the vendor may not be keen to accept any offers pre auction (as the agent keeps telling me) so I might not have no choice but to try get the property at auction.
 
Hi Rolf,

Is that offer that you posted from Bankwest for all loan sizes or does your total loan balance have to be over a certain amount?

With regards to LMI, is QBE LMI a lot cheaper than Genworth on all loans, and not just the First Home Owner loans?

Also, I have tried to find this on the net with little luck, but which lenders use QBE and which lenders use Genworth and also, which lenders refinance to 95% LVR?

Thanks for your help
 
kaiseriqbal said:
Hi Rolf,

Is that offer that you posted from Bankwest for all loan sizes or does your total loan balance have to be over a certain amount?

With regards to LMI, is QBE LMI a lot cheaper than Genworth on all loans, and not just the First Home Owner loans?

Also, I have tried to find this on the net with little luck, but which lenders use QBE and which lenders use Genworth and also, which lenders refinance to 95% LVR?

Thanks for your help
Click to expand...

For the BWA there are pegs, I think the email extract lists the mins ?

QBE vs Genworth , qbe is mainly cheaper for FHOG buyers. Note well also that different lenders receive diff rates from the same LMI providers so that can make a little difference too.

Although QBE and Genworth are the main providers, dont forget there are a few other which are self insured or portfolio insured such as ANZ LMI, Westpac and St George ( to 90 %)

The last question is a bit one the BIG side, let me help u with some of it.............find an experienced broker, this stuff can be like navigating a minefield. !

95 % refi...........NAB and Rams, and possibly a few others BUT it depends on what the funds are to be used for. if you combine that with cash out, then its even tougher.

CBA Homeside ING use Genworth

NAB, Suncorp, Heritage, use QBE

WBC, Stg and Rams use WLMI to 90 % and Genworth above that

Adelaide Bank use both, Advantedge use both but their primary is GE

Wide bay use their own

ANZ LMI use their own but I recall a part JV with someone painful ?

ta
rolf
 
Last edited:
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