RAMS Charged LMI Twice!

Hi all. My question is simply: Can a lender charge you LMI on the same property twice even though a new valuation is higher and therefore your LVR reduced?

We got a mortgage with RAMS for a 90% lend on our land and construction valued at $495k on completion. We also put in an extra $27k of our own funds to upgrade over the fixed price contract. Five months later we got an independent property val by the same val company that RAMS solely use. It came back at $585k, we desperately needed a newer car so got approved for a new mortgage (we are fixed on our original lend, so couldn't refi) of $40k and bought the car.

So our original LVR was 90%, we are now at about 81% (new higher val + additional fixed rate loan of $40K. Included in the fees & charges on our new loan was an LMI charge for the 1% ish over 80%. I argued this charge with RAMS who just blamed Genworth. We originally paid over $6k LMI on our home, now they are holding an asset which is worth $90k more than the original val on the first lend and charge us LMI again? I just can't get my head around it as I hear so often that 'you won't pay LMI again if you stay with the same lender' on here which appears to be utter crap!

Are they charging this because we weren't on a variable rate and therefore able to increase our loan? Or would it have not made a difference? We are looking to buy an IP soon and if they are just going to charge more LMI the option of going to another bank for the IP loan is looking very good.

Can anyone more clued up than me help me on this one?

Thanks in advance :)
 
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I am guessing RAMS forgot to mention to Genworth that you already paid LMI?

Wouldn't Genworth know that we had paid it as they were the original LMI providers used and it's the same property? I kept asking RAMS why we had to pay more money and quoted figures from Genworth's own calculator which showed we were overpaying. They said they use a different calculator and that my information was wrong.

Is there any way I can find out from Genworth themselves? What information would I need to provide?
 
Extra LMI

Recently we redrawn equity from 2 of our properties from RAMS. They charged us LMI too.
In your case.............
H&L package $495K, Loan Apprx $445K at 90%
With Extra $40K loan, total loan will be Apprx $485K. That is apprx 82.5% of valuation.
Heigher than 80%, so they charged LMI.

Please correct me if I am wrong.
 
No that's pretty much the case ipinvestor. However, we had previously paid $6k+ for a 90% lend. We are now at an 81% lend due to a much higher current val. Logic says you will pay more LMI for a 90% lend than 81% lend and RAMS did originally tell us as long as we stayed under 90% (regardless of what the val was) we wouldn't be charged any more LMI.
 
No that's pretty much the case ipinvestor. However, we had previously paid $6k+ for a 90% lend. We are now at an 81% lend due to a much higher current val. Logic says you will pay more LMI for a 90% lend than 81% lend and RAMS did originally tell us as long as we stayed under 90% (regardless of what the val was) we wouldn't be charged any more LMI.

When you do an increase, they usually calculate the new premium, deduct what you've previously paid and you pay the difference. LMI premiums have increased significantly over the last few years, so there is a chance that you'd have to pay more even though your LVR may be lower.

However it does seem that going from 90% to 81%, being charged any LMI be a bit excessive.

The other consideration is that RAMS is essentially a mortgage manager. They are very much subject to the whims of the mortgage insurer and a change in policy could mean that you pay LMI all over again. This is not something that tends to happen with mainstream lenders (which RAMS is not).
 
When you do an increase, they usually calculate the new premium, deduct what you've previously paid and you pay the difference. LMI premiums have increased significantly over the last few years, so there is a chance that you'd have to pay more even though your LVR may be lower.

However it does seem that going from 90% to 81%, being charged any LMI be a bit excessive.

The other consideration is that RAMS is essentially a mortgage manager. They are very much subject to the whims of the mortgage insurer and a change in policy could mean that you pay LMI all over again. This is not something that tends to happen with mainstream lenders (which RAMS is not).

Yep too right PT, that's why we're trying to get away from them when it's feasable. The only way they'd lend to us 9self employed and all) was to fix for 3 years at 5.99 on the original loan, then at 2 years fixed with the additional $40 k loan. A lot can happen in two years and we'd like to refi with someone else and hopefully have one or two IP's by then!
 
Hi FMS, before we took out any mortgages in 2010 I spoke to two brokers and 3 banks individually. I tried! RAMS were the only ones who said they were willing to take a risk on us. We were only in our newly established (from scratch) business for 2 years then. We were seen as too risky having 3 children and being newly self employed.

Once we had the house/land loan sorted, we were fixed for 3 years obviously with RAMS holding the deed to our house. So how could a broker have helped us then? I spoke to eChoice at that time and they said no other lender could do anything for us until we were off our fixed rate and free to refi?
 
Hi FMS, before we took out any mortgages in 2010 I spoke to two brokers and 3 banks individually. I tried! RAMS were the only ones who said they were willing to take a risk on us. We were only in our newly established (from scratch) business for 2 years then. We were seen as too risky having 3 children and being newly self employed.

Under these circumstances RAMS was probably the best choice. It is a risky scenario (as deemed by most lenders), but RAMS does tend to have a niche here.

Tobe is with RAMS. Send him a PM and perhaps he can dig a bit deeper.
 
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It's probably too late now- but sometimes for 1% lend it can be worth while putting that 1% on Visa (if possible) just to bring that premium down. When that happened to us, we did the sums on both scenarios, and for us, being able to pay back the Visa within twelve months, it was very much worth while.
 
Thanks for the advice guys! Yeah geoffw I wish we had of been in the position to close the gap with a CC but servicability wouldn't allow us to have a CC let alone have some $$$ on it unfortunately.

Thanks PT, I'll shoot Tobes a PM :)
 
new money means new lmi premium. As pete said, the LMI is worked out over the whole loan amount at the current val, and then the original premium (minus stamp duty and gst) is deducted.
The LMI premium and the way its charged is the same across most of the lenders i have dealt with.

From memory the minimum charge is $600.

Regarding the 3 year fixed rate, Rams isnt the only lender to assess like this. Many brokers avoid it, or arent aware of this. They think because they are using agregator software to compare 30 diferent lenders, they can be definative on who lends the most.

Dont feel stuck, now that you have a better val, and better income you can break the fixed rate, and refinance the costs to a new lender if you wish. You would probably have made your money back over the remaining fixed term with the ultra low variable rates the mainstream lenders are falling over themselves to offer new customers.

Regarding the valuation issues, I remember at the time advising it was quite a risky strategy. I thinkyou have done well to be able to 'borrow back' the equity injection you had to make at the time to get the deal across the line.
 
ps, while as Pete said I work for Rams, I do not agree with a lot of their methodology. I also work with a major agregator, and regularly write a large percentage of my business with other lenders.
 
How much was the extra LMI you were charged?

A: $654

Given that amount, it seems to me that you've paid LMI on the increase, rather than a premium for an entirely new policy over the whole loan. Most lenders operate in this manner.

Whilst an increase premium for an 81% loan does seem a little odd, there's not enough information to give a decent assessment, and as Tobe mentioned, if they have a minimum premium amount, it looks like you've been treated about as well as can be expected.
 
Thanks Tobe, PT and guys, yep the risk has paid off for us, but you can't have the rewards of property without risk eh?

Yes I get what you're saying, we did pay LMI on the increased amount at the new LVR based on the new val. Fair enough.

What I find hard to swallow is:

LMI paid for 90% LVR Val $495k November 2012 = $6095 k

LMI paid for 81% LVR Val $585 k April 2013 = $654

LMI (hypothetically) for entire amount baseed on new val = $2800-$3200 avg depending on insurer!

We made no improvements to the property from the first val to the next and the capital growth wasn't astronomical either. It was the original val that I insisted hadn't been done properly which just proves I was right all along. Had the val been accurate, the LMI would have been minuscule compared to what we have paid.

But like you have said, we have options now and id we're about to secure an IP, we will definitely be exploring those options ;-)
 
Over $500k and increases in Lmi in general......

if you want a definitive answer contact rams and get a quote as if you were a new borrower for the loan amount and LVR. Then compare that to what you already paid. The difference should be the $654.
 
Ok so I have an answer now that makes sense! As Tobe mention, we have paid a fee of $600 and stamp duty of $54 = $654 for the extra $40,654 2 year fixed loan.

The Westpac LMI calculator comes to $3300 for the ENTIRE borrowings, so we actually have (LMI already paid) credit per say to use for future borrowings up to that capacity.

I spoke to RAMS again and got nowhere with an explanation, then I spoke to a lovely lady at Westpac themselves who explained it to me in less than a minute! So as I now understand, all is above board:)

Shame my own actual lender couldn't use plain English to explain it, just one more reason to get away from em LOL :p

Thanks all!
 
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