To calculate your LMI premium, simply multiply your LMI rate by the amount of your loan. Next, add the stamp duty on the LMI applicable to the state in which the property is located. Mortgage insurers determine their premiums based on the perceived risk of a particular loan. The higher the perceived risk, the higher the premium charged.
The premium is calculated using a percentage of the loan amount. Most lenders calculate mortgage insurance premiums by capitalizing on the premium (adding it to the loan) rather than having to pay it with the borrower's own funds at the time of liquidation. The capitalization method can result in significant savings in the amount of the premium, since the premium is calculated from a lower LVR and a lower loan amount (that is, not including the amount of the premium itself) and, more importantly, whatever the premium, it is simply added to the amount of the loan. While most lenders now capitalize on the LMI premium, most lenders won't limit the final LVR above 92%, 95%, or 97%, depending on the purpose of their policies.
There are still a couple of lenders that will offer up to 98% or 98.5%, including the LMI. The LMI fee is charged by an insurance company, so a comparison rate doesn't come into play. Estimate the lender's mortgage insurance (LMI) that you might have to pay when buying, refinancing, or building a property. Using the same LMI rate table above, let's look at an example of how structuring your loans the right way makes a difference.
Doctors, Accountants and Lawyers 26% of specific investors may qualify for an LMI exemption; 26% save thousands of dollars on their home loan. Some lenders have professional packages for doctors, accountants and other professions where you can borrow up to 90% without incurring an LMI. As a first-time homebuyer, LMI discount offers will help you overcome the deposit obstacle and achieve your dream of homeownership. Since the lender's mortgage insurer calculates the rates of your premiums based on total loans and securities, all you have to do is separate the properties from the loans.
So, while reimbursements are generally no longer available, you can still save thousands of dollars simply by using the LMI calculator and comparing prices. In the following video, you'll see exactly how the LMI commission is calculated when you increase your loan with your lender (you won't get any discount on the LMI fee if you change lenders, even if your new lender uses the same insurance company).