The LMI refund only applies to. Borrowers should clarify their lender's policy on mortgage insurance reimbursement. The repayment is automatic and is initiated by the lender as part of the loan settlement process. Once the property is sold or the loan is repaid, the mortgage insurance is reimbursed to the lender or directly to the borrower within 30 days after the loan is repaid.
With the LMI in place, many lenders will allow you to borrow up to 95 percent of the purchase price of your home. The lender's mortgage insurance is calculated with the help of an LMI calculator as a percentage of the loan amount. If the lender needs to foreclose on your loan, LMI covers the lender for any losses once the property is sold. The LMI consists of a single down payment, which becomes payable when the borrower has a deposit of less than 20% of the price of the home.
Most of the time, you'll be required to pay the LMI on a lease if you apply for a loan of more than 60 or 70 percent of its value. Generally, you'll pay the LMI of your mortgage loan if you apply for more than 80 percent of the value of the property in a standard loan, or more than 60 percent of the value of the property in a loan with a low level of documentation. LMI is insurance that your lender takes out to insure you if you don't pay the loan and the property ends up selling for less than the outstanding amount of the mortgage. If your mortgage loan application is rejected due to the criteria of an LMI provider, consult your mortgage broker.
Also, on the downside, it's important to keep in mind that, as the buyer of the property, you don't have the protection of the LMI in the worst case scenario, where your lender ends up selling your property because they can't make repayments or resolve the problem in another way. Take advantage of financial assistance designed to help with that important deposit, avoid mortgage insurance (LMI) from lenders and to have your name appear on mortgage documents. You can get a discount on your new LMI premium if you stick with the same lender and increase your loan or refinance it internally to get a new loan. Under these circumstances, taking out an LMI policy now to buy a property instead of saving for a larger deposit seems counterintuitive.
They will only offer you a discount on your LMI premium if you increase your loan or refinance your loan and stay with the same lender (this is known as internal refinancing).