Missing Money! LMI & Loan Stamp Duty

Hi. In Money magazine there was an article about borrowers being refunded, or rebated, part of the lenders mortgage insurance (LMI) that they had paid on their loan.

It usually occurs if the borrowers refinance within one year. However, it seems that unless you know about this you may receive nothing, because it is usual for the lender not to automatically refund any amount from a cancelled LMI policy unless asked by the borrower.

This amount could be substantial, $1,000 or more.

We’ve found that with St George, if you refiance with them at a higher loan amount and/or anther loan product, they will credit the rebate against the new LMI or, if the LVR is less than required, will refund it the your savings account.

Also, on Today Tonight there was a report on mortgage stamp duty, which is payable on the loan contract amount at the office of revenue state (OSR in NSW).

When a borrower refinances the same property at a higher loan amount, the stamp duty payable on the loan is the new amount less the original amount. That is the borrower has only to pay the difference, not the full amount again.

It seems that banks are asking (forcing) the borrower to pay the full amount, paying the difference to the OSR and holding on to what would be equal to the original amount for up to 18 months before refunding it to the borrower.

Again, with St George, we are sent the mortgage document to have stamped by the OSR ourselves, so we can sort this out with the government office. No money is paid to them for stamp duty on the loan.

Purpose of this post?

Is anyone finding this out for themselves?
What about experiences from investors who have refinanced recently?

This seems to be one of those dark subjects kept in the bottom draw by the lenders. Time to raise awareness.

Michael