LMI again if accessing equity on 90% loan

Discussion in 'Loans & Mortgage Brokers' started by BenWa, 24th Mar, 2017.

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  1. BenWa

    BenWa Member

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    Hi all,

    I have a 90% loan on my IP and I want to access some equity. Do I have to pay LMI again?

    Ben
     
  2. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Yep

    If you stick with your existing lender then it won't be a whole new LMI charge. It will just be a small adjustment fee to your existing LMI premium.

    Cheers

    Jamie
     
  3. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    In most cases you shouldn't have to pay the full LMI, you'll have to pay LMI on the increase.
     
  4. Redom

    Redom Finance Strategist Business Member

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    As Jamie said above, only an adjustment fee in most cases.

    Trickier part is releasing the equity in LMI territory - its not as simple as making a purchase at LMI where the loan purpose is clear, some lenders make this more difficult than others.
     
  5. albanga

    albanga Well-Known Member

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    Heya Guys,
    When you say a small LMI adjustment fee, how much is this amount typically?
    Meaning the new LMI premium would be well below what you originally paid but just want a few $$ again above 80%.

    Cheers
     
  6. Terry_w

    Terry_w Broker, Lawyer, Tax advisor Business Member

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    Roughly work out full lmi on new loan and deduct what you had already paid. Rough guide.
     
  7. tobe

    tobe Well-Known Member

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    The minimum fee is $600 I think. Your broker can give you an estimate but it's generally calculated at the new loan amount (so maybe 1 or 2% of the total loans amount) less what was originally paid. Not including stamp duty.
     
  8. albanga

    albanga Well-Known Member

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    O.K Cool.
    So if you originally paid say 10k and you wanted to access equity and the premium was say 3k then your 7k ahead but regardless you would still need to pay about $600?
     
  9. tobe

    tobe Well-Known Member

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    Yes, but it'd be hard to find that sort of example, as lmi rates have been increasing usually the new lmi would be higher than what was originally paid.
    It's also worth noting that if there's been a change from ppor to ip use of the funds the lmi rates are higher. Some lenders pass on a fhb discount, which isn't available for top ups. Also the purpose of the loan can determine the premium charged. Debt consolidation is more expensive than reno or deposit for investment etc.
     
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  10. hieund85

    hieund85 Well-Known Member

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    Hi all,

    Does NAB allow equity release for an IP loan with LVR 90%? I have been told that it is almost impossible for investment loan now. Only PPOR.

    Thanks.
     
  11. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    if you end service for a new loan with NAB, and your score is good, to 90 % PI and IO is possible every day of the week.........

    Subject to usual servicing rigamarole


    ta
    rolf
     
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  12. hieund85

    hieund85 Well-Known Member

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    Thanks Rolf.

    I have a 3y fixed P&I investment loan with NAB with 2y remaining at 90% LVR. The property value has risen around 15% in the past year (according to NAB valuation). I want to access the equity and am willing to pay the additional LMI (new lending LMI - original lending LMI) but my broker said it is almost impossible since NAB does not allow equity release at 90% LVR for investment loan now. My servicing is still adequate.
     
  13. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Are you trying to get "cash out" or is the loan set up as a deposit and costs for another loan with NAB or lender X ?

    ta
    rolf
     
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  14. hieund85

    hieund85 Well-Known Member

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    I want to get it out to fund part of the cost of a recent purchase which will be mortgaged with another lender (settle in 30 days). I have enough fund to do it but want to use the potential equity to do so and keep the existing fund for other purposes.
     
  15. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    have you provided the pre approval from the other lender to NAB ?

    ta
    rolf
     
  16. hieund85

    hieund85 Well-Known Member

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    Loan with the other lender has been approved unconditionally.
     
  17. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Turns out I was wrong -fancy that :) Often wrong never in doubt


    IO no release above 80 % lvr........., PI doable


    As an aside, we wouldnt ever rate chase a deal with a fixed rate at that LVR for a portfolio builder for reasons such as this. Sometimes you cant foresee it, but often its clear as day.

    NAB does stand for Need Another Bank After all :)

    ta
    rolf
     
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