Paying LMI twice

Hi everyone,
After talking to multiple people at the bank etc I realised that none of them really know the answers here. Can anyone have input please...
I purchased a house with a LVR of about 93% because at the time house prices were rising faster than my savings and I just wanted to get into the market. The house has done ok and im now back down to just under 80% LVR (owe $435,000 value $550,000).
My 2 questions are - if I was to access equity and go back up to 90% would I pay LMI a 2nd time or is there a credit because you've already paid it once on that property ?
Would I be stupid to access equity and buy again or should I just try and pay down this property to a lower LVI before I access equity from it ?
Thanks everyone

 

If you top up the loan to 90% of the current value with the same lender, you should get a credit for the LMI already paid. The calculate the full LMI premium on the total loan, then credit you with what you've alredy paid. In most cases people would pay some money, but not a lot.

If you refinance to a different lender, you don't get any credit and you'll have to pay the full LMI premium. LMI is not transferable from one lender to another.

 

Great thanks Peter, is there normally a cutoff period for this or does it last the life of that loan ?

 

If I buy a property 90% LVR by paying LMI and 6 months down the road property value goes up and new LVR is now 80%. Will bank return me portion of money I paid as LMI initially?

 

No cut off that I'm aware of. I've done this successfully about 2-3 years after the original loan was set up.

If you're making good property decisions, there'll come a time where you don't need to go above 80% LVR.

 

Some lenders did this one, and I think I saw a lender recently offering a partial refund, but generally the answer is no.

 

I've done it twice. Borrowed at 88% on purchase, renovated and revalued and then borrowed back up to the 88%

Paid LMI on the way in, then essentially paid a little LMI on the extra funds reborrowed, so LMI on $80k for example was very minor.

One thing that does trip people is the LMI is calculated across the entire new amount (all though only paying the extra above what you have all ready paid) and it can push you over a threshold where your % jumps up

 

Not a popular opinion but Id say don't make a habit of going above 80%. Can end in tears if over geared and falling markets. Use once to get in market and then invest when you have sufficient equity.

 

I completely agree. Accessing equity over 80% isn't a great strategy for a lot of reasons.