Refund of Mortgage Insurance

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From: Miakat .


Recently I noticed a thread discussing the fact that once LVR is below 80% you can ask for a refund of LMI. I've tried this out today and seem to have been successful with NAB, but no luck with Westpac. Has anyone done this with Westpac at all. Just need to know if a precedence has been set.

Thanks

Mia
 
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Reply: 1
From: Duncan M



Sorry, cant help, I'm currently trying this scam on with the Commonwealth
Bank, I'll let the forum know what happens. :)

Duncan

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Subject: Refund of Mortgage Insurance


From: "Miakat ." <miaclapton@ozemail.com.au>

Recently I noticed a thread discussing the fact that once LVR is below 80%
you can ask for a refund of LMI. I've tried this out today and seem to have
been successful with NAB, but no luck with Westpac. Has anyone done this
with Westpac at all. Just need to know if a precedence has been set.

Thanks

Mia



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Reply: 1.1
From: Kevin Forster



We actually got a refund from the CBA on our PPOR when the mortgage dropped below the 80% LVR. Didn't even ask for it.

The only qualifier is that we paid down the mortgage to below 80% LVR rather than the property increased in value to over 80% LVR. I don't know if this makes a difference but you never know with a bank

Kevin
 
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Reply: 2
From: Robert Forward


Hi Mia

I also tried this with NAB today too.

Their reply was if you either payout the mortgage under two years or lower the LVR to under 80% in that time then you are due a refund.

They did however say to me that the LMI company should have been notified by the bank that the mortgage was paid out and to organise a refund. But from the way I see it, why would the LMI company do that for. Especially when they probably already keep a high proportion of LMI payments that are paid due to people simply not knowing they can get a refund.

This would especially be prevalent in booming times, where some places have had a 10-15% increase over the last year and you purchased with a 90-95% LVR you would simply be able to get a refund due to capital growth. My suggestion would be to have the bank do a reval on your property then take that to the LMI company and ask for your money back.

Cheers,
Robert

Property Inspection Reports @
http://www.creativefinance.com.au

The Sydney "Freestylers" Group Leader.
 
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Reply: 2.1
From: Glenn Mott


Robert,

And how much would the bank charge to perform the reval?? Might be lineball as to the benefits received but who knows!

By the way, are there any "Rule of Thumb" rates for LMI? I am wondering whether it might be more advantageous to use LMI on purchases made at or below fair market value instead of cross-collateralising properties.

Glenn
 
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Reply: 2.1.1
From: Owen .


Rob,

I've never use LMI so excuse the dumb questions.

My understanding is that LMI is a one off payment at the time the loan is drawn down. How long is this insurance for? The life of the loan (ie 30 years)?

The reason I ask is is there a time limit that getting you LVR down to 80% is a worth while effort. If you get it to 80% in say 5 years, is there no LMI left to refund or what? If LMI lasts for the life of the loan then I guess a refund is relevant at anytime.

Owen

"Gambling promises the poor what property performs for the rich – something for nothing"
 
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Reply: 2.1.2
From: Rolf Latham


Hi all

Most LMI providers will not refund anything beyond 12 months. Their reasons are simple, the default period of most loans are early in the piece - and they are in the business of insuring loans not providing refunds.

While LMI providers are the bane of many in the mortgage industry, without them many many loans would just not take place. In fact all the Wizards, the Aussies and the Rams etc could not function because with these guys EVERY loan is insured regardless of LVR.

LMI issues are even worse when you refinance a loan with the same lender because diff loans can be insured by diff LMI providers so you could end up paying twice.

Ta

Rolf
 
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