If you refinance your home loan which you took with LMI, do you have to pay LMI again?

jrt2020 on 14/01/2020 - 23:13

Hi
took a home loan by paying LMI as I could only afford 10% initial deposit

Now if I refinance to another bank due to reduced interest rate, should I have to pay LMI again?

Comments

[Deactivated] on 14/01/2020 - 23:15

+1

Yes.
Hold off until you dont need lmi.
dasher86 on 14/01/2020 - 23:31

+5

Depends on the valuation of the property vs what you need to borrow.
p1 ama on 15/01/2020 - 00:21

+1

What LVR are you going to refinance at? If below 80%, you should be good to go.
Ash SA on 15/01/2020 - 00:50

+4

Tldr; YES.

Rule of thumb is bank wants guaranteed repayments and if not, some insurer needs to pay it off. So the bank pushes you to buy insurance that bank needs. This is LMI.

So essentially you NEVER bought LMI, the existing bank bought it (you paid it). In saying that the real.meaning is if the next bank loans you beyond LVR of 80%, they would like you to buy THEM lmi.

So interesting part for you now, let's assume you bought property for 400k and still have more than 320k as loan to pay off (including LMI).

If you go to new bank, and the property is evaluated for 400k or less amount, you will pay the LMI in accordance.

But if the property prices are high enough and valuation comes as let's say 500k, 80% lvr means you can avail 400k without paying LMI.

So depends on the valuation and LVR for next bank loan.
mortgagebroker on 16/01/2020 - 12:03

Talk to a broker.
Valuations come in different all the time.

Avoided LMI for a customer last week, bank 1 valued at 680k, bank 2 valued at 750k.
Saved thousands for the client.