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LMI spikes at even percentage LVRs

Discussion in 'Property Finance' started by Sudh, 2nd Jun, 2016.

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  1. Sudh

    Sudh Member

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    According to Genworth LMI calculator, it seems, the LMI spikes at every even number LVRs. That is, difference between LMI for 82.01% is much higher than that of 82%. But, the difference between LMI of 82.01% and 84% is very negligible.
    Similarly for 84, 86, 88, 90, 92, and 94 percent LVRs. Created a table below based on the calculator output (Attached below).

    Is this the general rule for all LMI providers?
     

    Attached Files:

  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    its a reasonable guide

    there are subtleties with all of them around thing like that

    ta
    rolf
     
  3. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    88% is the answer
    Screenshot_2016-06-02-19-57-26.png
     
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  4. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    88 % tends to be also best for max lmi for thosewith lo score,since the end lvr is usually below 90 % .

    for lenders that have scoring engines that are "god"( such as Nab broker) 90.5 may be declined whereas 89.99 passes.

    ta
    rolf
     
  5. Sudh

    Sudh Member

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    Sorry. I didn't get what you are trying to say.

    I'm not trying to understand max LVR. I'm about to settle my property which has sale value of 390k. I have around 65k for deposit apart from stamp duty and other expenses. But, I was trying to understand how much less deposit I can make without considerably increasing LMI. I can also stretch my deposit by another 10k - by borrowing from my parents, but don't like to do it.
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Which don't you like more - paying LMI or asking parents for help?
     
  7. Sudh

    Sudh Member

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    Asking parents :) My dad wants to give some money which he got from selling his inheritance. I have been denying that for now. I was thinking of accepting it in case of valuation shortfall. But, luckily that came well.

    Also, my dad is in different country. Same 10k A$ there will be a small fortune. That will be his living expense for 5 years. But, here, it's not that much worth.
     
    Last edited: 2nd Jun, 2016
  8. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Gockie said it ............88

    ta
    rolf
     
  9. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Maybe you could give him half of the LMI you would save?
     
  10. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    Give some serious consideration to a combination of higher LVR's and a lender with excellent and clear washout policy in LMI territory - it can be a potent combo as you can re-use LMI credit at a later stage in your portfolio.

    We are at stage in the property cycle where 20% capital gains on properties are long gone so you need to value the amount of deposit you use on a purchase.
     
  11. Sudh

    Sudh Member

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    LMI will be around 3500 or even less. The problem is, he will not take it back.
    Didn't understand this bit. Anyway, my loan is approved through heritage bank. Just waiting for the settlement. It's off the plan. Hence still waiting for final plan amendment approval and OC.
    I won't be pushing it to 88%. Looking at 82-86 at the moment.
     
  12. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    Say the loan is $500,000, the LVR is 90% and the LMI is $10,000.

    After 12 months the value of the property increases and you can pull out $50,000 @ 88% LVR. The LMI at 88% is still $10,000 so you don't pay anything for the top up except for the LMI admin fee of around $600. So in effect you are re-using the LMI credit.

    Also what is the reason for using Heritage especially for an LMI application?

    Heritage isn't a lender with strong cash out policy for LMI applications.
     
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  13. Sudh

    Sudh Member

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    Thanks for all the information. I wasn't aware of these.

    However, I am not really looking for redraw options as of now. This is my PPOR. Intending to close the loan by 10 years before thinking about anything else. I chose Heritage because their interest rates were competitive (For loans above 80%) and steady over past few years. I also wanted the flexibility to switch to 95% LVR in case valuation came below sale price.

    I considered AMP as well. But, they had two problems:
    1. Max LVR is 90% including LMI
    2. They have been changing interest rates so often from last few months.