re; Refinancing and Mortgage Insurance

re; Refinancing and Mortgage Insurance

I was wondering what happens to the mortgage insurance you paid when you refinance a property ? Can it ever be recovered ? for example If you buy a property and then 5 years later refinance with another lender and the property is worth much more that when you purchased it, can you get this mortgage refunded ? as the LVR has significantly improved over the years. i.e. its worth $100K more today than when it was first purchased about 5 years ago.

Thanks,

007
 
I was wondering what happens to the mortgage insurance you paid when you refinance a property ?
The mortgage insurer keeps it. :)

Can it ever be recovered ? for example If you buy a property and then 5 years later refinance with another lender and the property is worth much more that when you purchased it, can you get this mortgage refunded ?
You can get a partial refund of up to 40% if you refinance within 2 years. Nothing after that though. (At least that used to be the deal - may have changed recently??)
 
like car insurance and u dont crash the car............u dont ask for the premium back 5 yers later

LMI in general has no "investment value ", but then no ponzi scheme does

ta
rolf
 
Some lenders still have refunds available for mortgage insurance. It used to be a flat scale determined by the insurers.

However, things became competitive and the refunds were traded off in return for lower premiums and volume bonuses for the lenders using the mortgage insurers.

So now, some lenders will have their own insurer, some will use external insurers above a certain risk level, and some will use external insurers for everything.

Whatever refund scheme they have, it doesn't happen automatically and you have to request it in writing along with 3 DNA samples and hope that someone actuall remembers how to process it.

So , no is the short answer, don't expect a refund.
 
On another front

Its an interesting thought process, which is perhaps more applicabale to mum and dad homebuyers, or those with high cashflows who can build their equity position quickly.

Even in the past where many LMI providers would pay back say 40 % of the of the premium when the loan was CLOSED and, this wasnt really a useful option for investors.

A "better" approach for investors is to top up the topping up the existing facilities and pay a little more lmi to get ongoing increaased leverage and buffer with little extra input.

ta
rolf
 
Generally , the bigger the lender, the cheaper the rate should be.

Not always true, as it is still a good area to charge more, especially if they self insure.
 
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