Browse Forums Home Finance 1 Apr 08, 2009 1:33 pm Hello everyone. Wondering if some bright spark help me out with some explanation..... I think I get the LMI concept, but how it works no. Is LMI calculated on the “Pre Approval Amount” or calculated when the loan is drawn as it progresses…for example: Lets say you have Pre Approval for $600,000 (which will be 85% LVR which means your up for LMI) so is this charged straight away……or rather not charged straight away and it goes more like this: You’re first payment is for land worth $150,000 (so you draw down $120,000 of your pre approval and pay $30,000 of your own money, thus your current LVR is 80% and therefore avoiding LMI. Yes?) Then you make your first progress payment say $70,000 where you do the same, draw down $56,000 and pay $14,000 with your own cash and your still at the 80% mark still avoiding LMI at this point in time… Am I on the completely wrong track here? Is your Pre Approval LVR begins at 85% but at the end of construction you dont use all of it and end up with 80% LVR have you successfully avoided Lenders Mortgage Insurance? Sorry for the long post. My head hurts now. Cheers Re: Lenders Mortgage Insurance. Argh! 2Apr 08, 2009 1:41 pm Mortgage insurance is calculated on the total loan amount you are borrowing. Doesn't matter whether you are buying established or building a new home - whatever the loan amount is on the contract is the figure they calculate the LMI on. You have to pay it up front when the loan is drawndown. Some things are worth waiting for. Re: Lenders Mortgage Insurance. Argh! 3Apr 08, 2009 1:47 pm As far as I'm aware LMI is charged (and added to your loan) when you first sign loan docs (so before any progressive payments are made)...If you have the cash to pay a proportion at each draw-down, it may be better to offer it upfront to the bank so you can borrow less and avoid LMI from the start... Edited to say...sorry Kyton! you beat me to it! Re: Lenders Mortgage Insurance. Argh! 4Apr 08, 2009 1:51 pm I see. So even though it would be ideal to get my loan for more money (rather than less, just to be extra covered for all post construction expenses), it may be smarted to be conservative with quotes now to avoid an even bigger LMI Think I have that right? Thanks for reply - v. helpful! Hi there, long-time lurker but first time posting. I've bought a house 2 and a bit years ago and last year we had some major water damage on a converted pergola area… 0 7897 I apologise for any confusion, but your understanding is correct. We approached our situation differently based on advice from… 11 53105 i would not be signing anything on the day read your contract about when builder submits final invoice generally, have to meet builder within 7 days of receiving final… 1 4683 |