Sorry to sound naive, but do lenders look at the contract sale price of the property, or the market value of the property when determining whether your loan requires mortgage insurance? eg, if the property’s market value is $180k, but the contract sale price is $140k, and I only have $10k deposit, would I still need mortgage insurance?
Whatever the lower of the two, so for example you might buy a property for $200K, but it s worth $230K. The banks will only lend on the $200K (and vice versa). Mortgage insurance only applies to how much you are borrowing not how much spare equity is in the property (so if you borrow over 90% you will be paying mortgage insurance, even if you have $30K in equity – it is irrelevant to Mortgage insurers).
Rgds.
Lucifer_auLucci
Some lenders will lend on valuation if there has been about 12 months between signing the contract and settlement. Otherwise it is the lower of contract price or val as Lucifer said.
Do what you can to settle the property (ie.personal loans, investor funds etc) and revalue straight away after settlement to access that equity. Make sure you pick a flexible lender who will allow you to do this.
You can get back most of the LMI as soon as you can show 20% equity in the property(depending on the timeframe after settlement). Most people don’t know this but you can get it back.
Do you qualify for the FHOG?
Good Luck!
Brendon
Acute Mortgage Reductions
‘Better Finance for More Homes Sooner’
http://www.acutemr.com.au
[email protected]You could try a non conforming lender at a slightly higher intrest rate they will not charge MI. Say someone like GE mortgage solutions. Your finacials and the amount you borrow will determin the IR.
aluminati.You can not claim back the LMI ..where do you guys get such incorrect information.
Its a bit like saying if you don’t have a crash or claim on your car insurance by the end of the year you can have your premium back.
LMI is not collected by the bank, it goes to an insurance company upfront who then cover the bank if there is a loss on your property for the ife of your loan. The lender is not in a position to refund squat.
Please don’t make untrue statements and represent them as fact…somebody may take you serioulsy and base a decesion on your incorrect advice.
Hi Nat
I didn’t say the lenders refunded the LMI, the Mortgage Insurers will.
With PMI ,if you refinance and show 20% equity in the property within 6 months after settlement you are entitled to a partial refund (not all of the premium obviously).
Not sure about GE criteria, and in the case of certain lenders insuring themselves then yes you would apply through that lending institution.
Ring them up and check it out for yourself.
Brendon
Acute Mortgage Reductions
‘Better Finance for More Homes Sooner’
[email protected]
http://www.acutemr.com.auNat,
Your analogy is flawed. If you dispose of a car or no longer require insurance during the insured period then you will get a refund of any unused premium.
The same applies to LMI.
I have clients who have been successful in getting a partial trefund under certain circumstances.
Cheers,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Some banks will take valuation price for LMI calculation purposes. One of my clients was able to get a 95% loan with no mortgage insurance because the property valued at about 20% more than pp.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Terry, must have been a great buy!
I have been able to get 90% with no LMI based on the valuation. And yes it was a bank (I know I don’t have too many good things to say about them but in this case…fantastic)
Brendon
Acute Mortgage Reductions
http://www.acutemr.com.au
[email protected]Hi guys, this thread is interesting for me as I am in the middle of refinancing.
My first problem was they undervalued my IP by about 30-40K. They gave me a val of 190K where smilar properties are on the market for 220-230K.
Secondly, due to the low valuation, I had to go to a 90% LVR. That is not all, now they are making me pay the LMI up front, and won’t just add it to my loan (I posted this particular whinge on another thread[hmm])
So what will lenders accept if you are to “show” the extra equity within the next 6 months?
Do they need to get their own valuation or can I get one and show them? How does one go about trying to get some of the LMI back?
thanks[hair2]
HHH
HHH
I think you would need to ask the bank what their requirements are. They may wish to get the valuation themselves (or maybe you could get one done by one of their panel to take to them).
Cheers
MelOriginally posted by Nat R:You can not claim back the LMI ..where do you guys get such incorrect information.
Its a bit like saying if you don’t have a crash or claim on your car insurance by the end of the year you can have your premium back.
LMI is not collected by the bank, it goes to an insurance company upfront who then cover the bank if there is a loss on your property for the ife of your loan. The lender is not in a position to refund squat.
Please don’t make untrue statements and represent them as fact…somebody may take you serioulsy and base a decesion on your incorrect advice.
Hi Nat R,
Id suggest you heed your own advice before levelling wayward missives at people who DO know what they are talking about. Yesterday I received a partial LMI refund from GE, for a property I financed towards the end of last year. The refund amount was just over $610. It was because of the advice of people like those in this thread that I was able to receive the refund – if I had listened to yourself the money would still be in the hands of the LMI provider.
If you are eligible, there is a very good chance of getting a partial refund – if you never ask there is a 100% chance of getting NOTHING.
I know which I prefer.
Best wishes,
Jay.
HHH,
Push for another valuation by showing PROOF of the comps and that the valuer got it wrong.
We always give valuers a nice little kit with comps, recent sales & who to call at REAs to verify them. It works wonders on ensuring that properties are not under valued….because you can always take the same info to the bank & the bank may take away business from that valuer
Cheers,
Aceyducey
Rob,
When the loan term is shortened does the bank put any riders in the contract such as increased exit fees etc?
Thank you for your information.
Jay
ps- a real new guy – first post!
Originally posted by The Mortgage Adviser:
Regarding the purchase price, if it is below the market value of the property (as in the example), mortgage insurance will be based on the valuation price but most lenders will only borrow based on the purchase price. They like to see what they call ‘hurt money’ being put in by buyers.Rob
Rob, I bought a place a few years ago for $20K under valuation, borrowed 90%, and was hit with MI because it was a 90% lvr on purchase price. They didn’t give a toss about the value.
Cheers
MelMost lenders take the lending valualtion as the lower of the purchase price or external valuation.
There is a legal definition of valuation which in essence states that purchase price = valuation
hi Melbear
i’ve found the mortgage insurer will take contract price even if valuation is higher (heck, they have to make SOME money).
this has occured in successful off the plan purchases (yes, inner city warehouse conversion). Say 10 – 12 months from signing contract to completion – val from which bank’s valuer exceeded contract price, funding was only able to be effected at contract price.
is there any other way?
cheers
brahms
If you don’t ask, the answer is no!!
rob, re that highlighted post in melbears post – won’t the mortgage insurer and the funder be united in what they lend against.
(obviously the MI isn’t funding anything, i’m sure you know what i mean)
cheers
brahms
If you don’t ask, the answer is no!!
Originally posted by The Mortgage Adviser:
Just to make sure of something, did $20,000 under valuation mean that you borrowed less than 80% of the property valuation price? You may have paid mortgage insurance on 85% or 87%. Tell me how much you paid, how long ago you paid it and how much the purchase price was and I can tell you.Purchase Price $159K, borrow $143.1K. Valuation $185K – by bank valuer prior to auction (bought after auction) commissioned by me. No idea how much MI I paid – it was 5 years ago. Don’t think bank actually ordered their own val – if they did, they would have happily used the one that I commissioned….
Didn’t use a broker, used my friendly bank manager (who has since moved to the Gold Coast[thumbsdownanim][crying])
Cheers
Mel
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