If you have to pay LMI on your property loan, the premium may be capitalised into your loan amount, provided the total sum borrowed does not exceed the maximum lending margin.
The total amount payable to the lenders mortgage insurer is
a combination of the charge and government stamp duty.
The charge is calculated as a percentage of the loan amount
and the government stamp duty is calculated as a percentage of the charge.
The premium rates are identical for all States.
Only the stamp duty varies from State to State.
The minimum charge applicable to LMI is usually around $500.
When calculating LMI, the loan value ratio is taken into
consideration.
If fees were required to be borrowed, this would need to be
added to the total loan required, which therefore increases the LVR as the loan
amount increases.
Each lender has a different maximum LVR but occasionally
lenders will have a product which allows capitalisation of the cost of the
mortgage insurance to the loan amount and occasionally, there are lenders that
require LMI is paid up front.
Each LMI insurer has their own pricing structures and each
lenders rates differ and there may be different rates for Interest Only loans.
Where a borrower has not defaulted on their loan, most
mortgage insurers will refund 40 to 50% of the mortgage insurance premium to
borrowers who refinance within the first 12 months.
It is a lenders responsibility to advise the mortgage
insurer of the repayment of any insured loan and initiate a request for a
refund, so borrowers need to ask their lender directly, to organize this.
Need a property loan?
Contact us @ propertyloans@realrenta.com
Jason Gwerder
Wednesday, 4 March 2020
