im just wondering how LMI works if you refinance
say if i buy something for 200k with a 10 or 20k deposit (5 or 10%) i know id have to pay the insurance
however say a year later the property has increased to $250k (far fetched i know) could you refinance your position to 80% (180/250=72%) recieve a rebate on the intial mortgage insurance, or could you refinance your loan to 90% again (225k, another 45k). I know if you did this you would have to pay mortgage insurance again but would you only have to pay the difference between it or would you have to pay the whole mortgage insurance on the whole lot again?
Your help would be great
cheers
Dave
Dependant on the lender and the LMI company if you refinance once the property has gone up Yes you may get a refund on the LMI however in saying this most lenders now charge an early repayment fee if you discharge within the first couple of years.
Secondly yes you will only pay LMI on the difference and will not be charged the full amount again.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
so would that be a full refund, proportinate or just like a goodwill refund? ( i think i was ready somewhere 40%)
is there like a sliding scale for mortgage insurance or is it like a set 5% of the loan or something?? would it be a better to continue to re finance on loan if it already has LMI to pay additional LMI to recieve more money to say make a substantial deposit on the next property?
just thinking the best way to work out general finances
Each lender and LMI company has its own policy on refunds.
To avoid early repayment penalties you would be better off to increase the loan on the same security and then do a separate stand alone deal on the new IP with the funds raises as deposit.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
thanks richard, thats what i sort of meant…
in the above situation if i then wanted to buy another property worth 200k,
id refinance the 1st loan to 220k (88% LVR) (from 180k with a value of 250k), pay the mortgage insurance on the extra 40k and use the 40k redraw as a 20% deposit for my new 200k property and escape paying LMI on the 2nd property…
i would imagine the LMI bill would be lower for the 40k redraw than taking a 20k redraw (leaving the original loan balance at 200k or 80%) and then paying LMI on the new property as it would only have a 10% deposit…
i hope this is making sense
More or less.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
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