LMI of $6k for a $10k loan to reno IP? Already paid $8k+ LMI on this loan

Trying to take a 10K top up on a property valued by bank at $500k to do some renos on an IP. Loans against that one are approx 385k plus 30k - total $415k. When originally purchased LMI was paid on this property to 95% and a bit more also paid when I did a top up to 87% 12 months ago for other renos (charged $1200 that time for 70k). Total LMI paid on this loan is $8405....when I enquired about this top up I was told a Personal Loan is my cheapest option as I'll have to pay $6k in mortgage insurance just to get the 10k top up? Does this seem correct? Mobile lender on the phone first time congratulated me on never having paid LMI on the loan and I had to correct him and then he found it, just wondering if maybe he's mixed it up again as I thought what you'd already paid came into it??

 

which lender?
do you have a recent valuation?

 

CBA, and they organised their own valuation which came back at 500k last week.

 

Maybe he read $600 as $6000? He redirected me back to the branch who referred me to him and now they are chasing me to go the personal loan route though.

 

Yep sounds strange to me.

 

Thanks, I'll have to follow it up further....maybe try a different branch with an onsite lender rather than this mobile one.

 

So they've recalculated it manually, apparently the system didn't add in what was already paid....and come up with $1250LMI for $10k. I paid $1216 12 months ago for 70k at same LVR???

 

Get a good broker to do it for you. You might also be able to get a better val through a desktop val and avoid LMI all together.

 

$1,250 is the minimum amount of LMI possible now (if LMI is applicable)

So OP unless you get a valuation that get's you <80% $1,250 will be payable.

 

1250 is 12.5% on a 10k,
add yearly mortgage rate of 4%,
that turns out to be IR of 16.5% for first year.

@Terry_w
what do you think of 0% bt for 18 months as an option for OP? provided he can repay back in time.

 

Yep, he sent me his new calculations....$1217. CBA got their valuation done, I thought it was a bit low, but how can I get a higher one when they use their own? Can't refinance mortgage with that much LMI paid out on it already!

 

Was it a desktop of shortform... did they inspect inside the property?
The bank didn't get their own, they paid for a professional valuer to complete the valuation.
How have you determined yours is worth more? Do you have comparable sales to justify the price?
Refinancing to repay LMI doesn't make sense, some brokers on here might be happy to val shop for you...

 

Could be a good option potentially

 

It was a walk through valuation, my property has been gutted and renovated in last 6 months so I wanted that. I've been through several comparable properties in the past 6 months, in same block as mine with same land/bed/bath etc and the only sale in the immediate vicinity that was used in the comparison was a highest one that went for 600k (downstairs not even legal height or built in - only difference is the storage area). All comparisons bar one were in very different areas of the suburb, newer houses only 20yr old, half the size land and smaller interior, not reno'd, still considered superior sales at mid-500's. I wasn't expecting mine to be a lot more than 500, but I would have thought 530 would've been reasonably realistic.

Thanks for the ideas, I'll look into it some more.

 

I'm guessing the new valuation is lower than expected, and has actually reduced your equity and increased your LVR, even without the $10K top up? So that might be part of the cost.

 

If you can find some comparable sales (similar suburb, finish, block size, building size, Sales within 6 months) then send it through to the banker and ask them to dispute the valuation.
If you can't find these, you will struggle getting valuation changed.