If I buy a 200K property, with 35K in hand, use 20K as a deposit and use the other 15K as reno costs(and park it in the offset) then I will have a LVR of 90. How would I go about caluclating LMI, note that with the 15K in the offset i will be renovating and will bring hte property to 225K+, making the LVR to be exactly 80%(thats after 6 months of reno).
So how much do you reckon the LMI would costs????????
Does it depend on purchase price,(e.g. a 90LVR of a 100K property would have less LMI then a 90LVR of a 200K property), Does it depend on your LVR(an LVR of 85 will be cheaper than 86, and 87 and so on.)??Christopher Fife.
Chris
LMI is based on a combination of 3 things:
1) Loan amount on a scaled basis 0-$300K / $300 – $500K and $500K and over.
2) Whether the loan in interest only or prinicpal & interest.
3) The LVR.The post code of the property is also a major influence on whether cover can be provided or not.
The premium is based on the advanced amount as a percentage of the purchase price / valuation whichever is the lower and there is no allowance for funds held in an offset account.
Richard Taylor | Australia's leading private lender
Thanks QLDs. Is there a way that I can actually find out the specifics. I input the data and the postcode and get an amount back for LMI.
Chris.
Chris
Each lender and both of the main mortgage insurers has a different scale however use check out http://www.pmigroup..com.au
as this will give you a guide.Richard Taylor | Australia's leading private lender
Thanks again Richard, that webstie helped.
I also found out another website(actually a PDF) http://www.prosolution.com.au/articles/gear.pdf
From a quick skim, a 200K house with a 180K mortgage(90LVR), ON AVERAGE it would be 1.00% of the loan amount, e.g. $1800. If the LMI is going to be this, then i'm not worried at all. I was expecting like atleast $4,000 even up to 6-7K.
Thank you for your help.
Kind Regards,
Christopher Fife.That will give you a guide however as i mentioned earlier each lender charges a different rate dependant on who they use to cover the loans. Both the LMI companies offer different rates to the lenders dependant on volumes.
Yes for a 90% LVR you are looking at around 1% of the loan amount. This would increase over $300K of course and again over $500K.
Richard Taylor | Australia's leading private lender
1% sounds nice.
I know it can vary according to lenders and the LMI company used.
Also, this counts as a borrowing cost, and it will be over $100, so it should be tax-deductable over 5 years.
So say it costs $2,000.
Over 5 years, $400 per year.
Say 30% tax rate thats $120 back each year for 5 years.
So i'm actually quite happy with our findings, thanks.Christopher Fife.
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