Hi, i am new to this and just have a query,
I know that if you lend less than 80% u don't need LMI. But is it true that some peoples loans get rejected not becasue the actually bank says NO, but because the LMI says NO. I was of the belief if the bank says yes and you had the money to pay then u would gain LMI without a prob.
I know this dosn't make much sense but if someone could sheed some light on it i would be very greatfull.Cheers
TimHi there
I note we recently had some difficulties with Mortgage Insurance.Did you know that a lender will normally require that Mortgage Insurance be paid – and that you as borrower only need to pay the premium if the LVR is more than 80% – if the percentage is less than amount then the Lender will often pay the mortgage insurance.This was spelled out in our credit loan documents and we too queried if our loan would be denied by the Lender if the insurer said No – it did annoy us that a third party – beyond our control – could regulate whether we did or did not get our loan. Apparently it is not normally a problem – but it did worry us – so I can empathise with you – but most Lenders do require the protection and it is one of the conditions of your loan – and does have to be disclosed as a condition of providing credit to you.thanksHi there
If the percentage is less than amount then the Lender will often pay the mortgage insurance.
This is not actually the case. There are ocassions where the loan is > 60% when the lender will require the borrower to meet the premium.
When you consider that the mortgage insurer carried the eventual risk and not the lender it is not suprising that if they reject the application the lender will not want to provide funding.
Richard Taylor | Australia's leading private lender
I think Westpac may do 85% without LMI.
Hi there Richard
is the lower percentage dependant upon postcode? or are there some other factors? as our dealings have mainly been with lenders with the 80% percentagethanksMost of the Retail Banks are required to charge LMI where the loan is > 60% and the loan is done on a Lodoc basis without proof of income.
All securitised lenders mortgage insure every loan irrepsective of the LVR. Most absorb the premium into the interest rate and charge a higher rate however some still charge the LMI even if the LVR is 80% and below.
Westpac & Rams will look at 85% LVR but be careful with these products as there is always a catch.
A couple of others self insure and then do not charge LMI but charge a "FEE" instead which may work out cheaper especially in the higher LVR loans.
Richard Taylor | Australia's leading private lender
LMI companies often reject loans that the banks would otherwise do. Especially when in comes to small defaults etc. Becareful of where you borrow as some lenders insure all their loans, but pay the premium – the client is often unaware and this can affect later borrowings, especially if the client is wanting to use No/Low Docs/
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
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