How to get banks to refund lenders mortgage insurance?

I had a whopping 15k mortgage insurance from CBA, on a 2 year fixed loan. I have auctioned my property this weekend and settling after the 2 year fixed term is over.

I was under the impression that like other insurances, I could expect a reimbursement of the insurance for my mortgage, which am not using anymore.

Called CBA to find out, they aren't going to be doing that. Felt that was odd! Has anyone had this experience and managed to workaround it?

 

You were never using it, the bank was - you were just paying for it.

edit - paid.

 

@Brady Right. But now since I am paying off, am guessing the bank doesnt need any more insurances and should be reimbursing some of the amount back..What do you think?

 

Many years ago some lenders have a policy in place where if you paid off the loan within 12 months you could get a partial refund on the LMI premium. The lenders which had that policy formally rescinded it and it's no longer available.

That happened in about 2007 or 2008. There is no chance of getting a refund today. Even prior to that it was rare.

 

The bank is not the one who you have paid the insurance to (assuming not internal 'inhouse' insurance with CBA it's called LDP) it's the insurance company.

LMI is not refundable for policies > 25 July 2008

 

@Rolf Latham Yes am buying another property. Not sure if the same bank (CBA), unless they refund some of the insurance

 

You could consider a security swap rather than paying down the loan. That way your LMI isn't wasted and you may be able to reuse it if you access equity at a later date.

 

@Jess Peletier Interesting thought! Not sure how that will work..Perhaps my MB will figure it out?

 

Your broker would be the best person to figure this out as they'll have the best understanding of your lending position.

A lot of things need to line up to make it work though. If you still need borrow more money for the new property over and above your current loan, you probably won't save anything on LMI.

 

Even if you're not buying another property straight away but have intentions to purchase again, you could look at the options of doing a security substitution.
Existing loan could be secured by a 'Cash Account' - those funds could be used later to purchase a property which would secure the same loan.
See how you go with your MB - it's reasonable straight forward, just can take a little bit of time to establish/process so don't leave it until the last minute.

 

Welcome to the new model of cash donations for nothing, aka a rip off.......and if the bank made a claim, the insurer would then likely be after you to pay back....talk about a rort !