Cheaper LMI is a mouse click away...
Lenders Mortgage Insurance (LMI) is a fee you pay when applying for a mortgage loan. Generally you will only pay this fee if you are borrowing close to 100% of the purchase price of your home. So how can you reduce your fee? There are several tips and tricks that can help you drastically reduce your premium or wipe it out altogether!
Step 1: Which lenders do you qualify with?
There is no point getting the best deal if your loan is declined!
Talk to a mortgage broker or several lenders to see if you qualify for a mortgage loan. In particular you should ask the lenders if they have any of the following requirements;
* Do they need you to save a down payment for your mortgage?
* How long do you need to be in your job for?
* Do they require a high credit score?
* What LVR (Loan to Value Ratio) can they accept?
* Do you have a high enough income to get approval?
With these questions answered you are well on your way to creating a short list of lenders that can help you.
* Do they need you to save a down payment for your mortgage?
* How long do you need to be in your job for?
* Do they require a high credit score?
* What LVR (Loan to Value Ratio) can they accept?
* Do you have a high enough income to get approval?
With these questions answered you are well on your way to creating a short list of lenders that can help you.
Step 2: Obtain their LMI premium rates
Harder than it sounds!
Each lender has their own interest rates, fees and LMI. Comparing interest rates on different mortgage products is easy because they are all available on lenders websites. However comparing LMI premiums is near impossible as most lenders do not publish their LMI rate tables on their websites.The best way to compare premiums is to use a mortgage broker. They have access to the information that you do not and can quickly work out if you are eligible for any special discounts on offer.
Step 3: Calculate and compare premiums
Did you pay attention during math class?
Don't worry, the math used to calculate an LMI premium is easier than you think! Simply multiply your loan amount with the premium rate applicable for your loan amount and LVR. So for example if you were borrowing $500,000 and your LMI premium rate is 2.8% then your LMI premium would be $14,000.
Do this for each lender you have spoken to and then compare the results! If you are having trouble with this then why not use an LMI Calculator that can work out the LVR, LMI premium and compare several lenders for you at the push of a button.
Do this for each lender you have spoken to and then compare the results! If you are having trouble with this then why not use an LMI Calculator that can work out the LVR, LMI premium and compare several lenders for you at the push of a button.
Give us your feedback!
Have you successfully used our method to reduce the mortgage insurance fees for your home loan? Let us know how you went!
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by twoba
Your Australian expert on constuction and finance. I'm a mortgage broker that specializes in Transportable homes, modular homes, prefab homes, low doc...
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