I am just in the process of negotiating with the Commonwealth Bank to get a loan for a $296k property.
I have 3 other properties and my new LVR is around 86% requiring mortgage insurance.
My three other properties have previously had mortgage insurance taken out against them to protect these loans and my understanding was (and was told by the bank) that the mortgage insurance payable would only relate to the portion of the loan that was not previously insured (ie the $296k). So mortgage insurance was approx $3k.
Now the bank is saying that the mortgage insurers want to quote me my premium of $7500!!!! based on the TOTAL DEBT balance regardless of whether they were previously insured PLUS they want to charge me a higher premium because my total loans are now above a certain threshold.
please help me what can i do???
is mortgage insurance negotiable, is the premium really payable on the total loan balance regardless???
This is a serious set back because it means that I cant invest in property anymore without getting LVR down to 80%, or else i would have to pay $7500 each time i want to buy even a small $100k property.
please help, anyone.Desperate Dan
Hi Dan,
As MI is a closed shop (ie only 3-4 out there) and any 1 bank will only be using 1-2 of them, it look pretty grim for you. The only suggestion I have is GE Financial not only is a lender but one of the few mortgage insurers. You may find that sourcing your loan through them may lead to a better deal on the MI…but no guarantees! Also, it is worth noting, that they will also lend 85%LVR without incurring MI against your account! A good mortgage broker should be able to plead your case for you, as well!
Best of Luck,
JasonHi Dan,
I agree, things look grim.
But this is where the chase gets fun. I doubt that what was said to you is hard and fast policy… you just need to look for an angle to negotiate on.
Keep asking questions looking for the right angle that will get the answer you desire.
Otherwise, what I would do is redraw some equity from your other deals, or maybe a temporary overdraft… heck I’d even use my credit card to bring the LVR below the mortgage insurance threshold to save the $7,500.
Which lender are you using, because most of the big banks ‘self-insure’ meaning that you can avoid the monopoly problems.
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi Steve, thanks for your reply.
What do you mean by the banks self insure? does this mean that mortgage insurance is negotiable??Hi Dan,
you pose this question:“What do you mean by the banks self insure? does this mean that mortgage insurance is negotiable??”
I might be able to shed some light on the subject, so here goes.
1stly i believe that what is meant by the expression that “banks self insure”, is that they actually assume the risk associated with offering you a loan WITHOUT MI, and hence I believe the answer to whether MI is negotiable is no, however the deal itself is!
let me give you an example:
Early this year i proposed a purchase of two villa units to my mortgage broker of whivh was initially rejected on the basis that i was refused MI. On appealing the decision and negotiating further ANZ decided to offer the following deal:
80% leand on the investment unit
with 95% lend on the unit we were proposing to live in, without MI!!
in this example ANZ chose to self insure the second loan of 95% as there risk assesment of our situation was obviously different to that of the mortgage insurers!!
So whilst the MI ws not negotiable the deal was… always remember that the mortgage insurer is an external party to the negotiation and therefore you can still negotiate terms etc with the lender… if your case is presented in a manner that makes it attractive to lend to you without MI, then you still have negotiating power!
Hope this has helped a little,
Cheers,
Michael…“Read books, listen to tapes, attend seminars – they are decades of wisdom reduced to invaluable hours.” – Mark Victor Hansen
An important note on this – mortgage insurance previously paid, should be refundable against a new insurance – check this out – this comes from info by GE mortgage insurance, so like other insurance, say your car, you should get a partial refund to defray the new policy. Self insurance does not mean the banks assume the risk, merely that they pay for the insurance up to 80% LVR[
][]Never fear,
I had the same problem ….they wanted $12000 for MI. The broker was financing against all other properties (hence getting the commission for all refinance). In the end i financed against only one other property….. the one with the most equity.
This loan had to be done with a different bank to keep loan value at each bank below $500 000 (causes more problems) and only had to pay $2000 in the end.
Hope this is suitable for you.
][
The topic ‘PLEASE HELP: Mortgage Insurance Rip Off’ is closed to new replies.
