Hey Fellow PI's,
My question is based on Mortgage Insurance where im hoping to get a little more guidance.
I have been using the NAB home calculators which i find extremely useful
http://www.nab.com.au/wps/wcm/connect/nab/nab/home/Personal_Finance/2/
After dropping into a Mortgage Choice broker and having a chat, we pulled up a few scenarios with a 5% and 10% desposit. I found there Mortgage Insurance quote was ~12k with a 10% LVR on 500k property, and ~16K with a 5% LVR. These figures were significantly higher than the NAB website which also quotes MI, these came out to be ~6K for 10% and 11.5K for 5%
I am hoping someone might be able to shed some light on the matter. Finding a 20% desposit for first home buyers is almost impossible.
Any feedback, experience or words of wisdom on this matter would be great.
I have planned for ~10k to cover MI costs, transfer fees ets, based on the NAB calculator. The broker has thrown me off a little with his figures and find this strange as there are only 2 insurance companies that compete for the business.
I showed him the NAB calculators and compared with his own, the broker couldnt explain or justify anything…. do brokers take a a cut from Mortgage Insurance?? I didnt think they did??
Earlier this year I put a client with a major and saved them 6k in LMI compared to a loan contract they had nearly signed – was not a big loan either.
The majors often self insure which is cheaper. They also have slightly cheaper LMI in some cases due to the volume of business they offer the insurer.
Don’t think that LMI is always the same price : – ). Non banks and credit unions are usually a bit more…
LMI not only varies between the 2 insurers but also from lender to lender.
As Banker mentioned the majors self insure so a Anz deal going through PMI could be cheaper than the same loan going through say Suncorp.
Then depending on the lvr you have the odd lender who will pay the LMI for you or in some cases not charge it at all but charge a reduced equity fee which is cheaper still. If your Broker has given you the figure i tend to think he is likely to be more accurate than the Banks online calculator.
Richard Taylor | Australia's leading private lender
Depends who’s LMI rate the broker is calculating on. How many brokers do you think are really on top of true loan comparison when you take various LMI premiums in to consideration?
Most people ignore LMI because it’s added to the loan. Unfortunatly you still have to pay it back…
Ok Banker agree there.
Maybe i was giving the Mortgage Choice Broker too much credit.
It is probably his second week in the job.Richard Taylor | Australia's leading private lender
Okay, so which of the major banks have the lowest LMI?
Which of the odd major would possibly wave the LMI on a 5%-10% deposit?
So if LMI is added to the loan then lets say I buy a house for $500,000 and the LMI is $7,000, then how much will I need to put down on a 5% deposit? $25,000? or $32,000?
Cheers
LMI will vary depending on the loan amount and lvr and the scale will change so without having an actual numbers that question cant be answered.
No lender will waive the LMI on a 90-95% lvr.
You will need to finance 5% deposit plus LMI if LMI is not capitalised or $25,000 if the lender will fund it.
Richard Taylor | Australia's leading private lender
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