Browse Forums Home Finance 1 Apr 08, 2009 7:29 pm Hi all, I'm after some help, we have just settled our land loan with Westpac and are now looking extending it to a land and construction loan in October this year. Last year we were all fine to have a smaller % of deposit for mortgage insurance for this, but this year it seems they have changed their criteria and Westpac is telling us that we now need 20% in cash of the total build (land and house) to satisfy mortgage insurance requirements due to risk in the current economic climate. We don't have 20% and were hoping to get away with 10%, this includes what has already gone into the land as cash deposit. Even if we pay as much as we can off the land in the next 6 months we aren't going to come close to having this amount. Apparently this 20% only applies to loans above $450K. So, has anyone gotten around this this year? Westpac is looking at alternative mortgage insurance brokers for us at the moment... Kate Re: 20% 4 Mortgage Insurance-an impact of the finanical crisis! 2Apr 08, 2009 8:00 pm an broker/friend told me he had 4 loans that had been approved by a bank rejected today by a mortgage insurance company. back to the drawing board on all those for him ’’Quondo Omni Flunkus Mortati ’’ If the women don't find you handsome, they should at least find you handy. Stila BK1 Build Thread The best place to talk about sport Re: 20% 4 Mortgage Insurance-an impact of the finanical crisis! 3Apr 08, 2009 9:01 pm fordehouse So, has anyone gotten around this this year? Westpac is looking at alternative mortgage insurance brokers for us at the moment... Kate Need more information on this to make a proper comment but there is already one pertinent bit that needs attention. Westpac uses WLMI (as in Westpac Lenders Mortgage Insurance) for insuring their loans. Why would they look for an alternative? Re: 20% 4 Mortgage Insurance-an impact of the finanical crisis! 4Apr 08, 2009 9:31 pm I dont get it? If they want you to have 20% of the total for the house and land, why would you need mortgage insurance? I thought you only need the insurance if you have less than 20% deposit? Idiots are fun, that's why there is one in every village! - Dr. House - Re: 20% 4 Mortgage Insurance-an impact of the finanical crisis! 5Apr 08, 2009 11:29 pm yes wonderland I noticed that too. I think that was probably miscommunicated to fordehouse. What is possibly meant here is that due to fordehouse's location or something or rather WLMI stopped insuring. Re: 20% 4 Mortgage Insurance-an impact of the finanical crisis! 6Apr 09, 2009 8:20 am Hi, Sorry for the confusion, what I meant was that Westpac is looking for ways around this mortgage insurance issue. Wonderland you are right, if we have 20% then we don't need mortagge insurance, but if we have less than 20% then they won't provide insurance. It is confusing! We're now thinking the way around it is to have 2 loans, one land and one build. Re: 20% 4 Mortgage Insurance-an impact of the finanical crisis! 7Apr 10, 2009 3:40 pm We sometimes wrongly assume that everyone here lives in a metropolitan area (and members not displaying their location in their profile doesn't help either). I think it's timely I cover an important aspect of lending here. If you don't have 20% deposit, LMI geographical zoning applies. Every zone or category has its own maximum limits in terms of borrowing (amount and LVR). So if you are in say Wollongong (category 1) and you are first home buyer with no genuine savings, the maximum you can borrow against land may be 70% but to buy an established home may be 95% (max $650,000). But if you are in Bendigo (category 2) maximum loan amounts are reduced. Bega (category 3) would be even less. Re: 20% 4 Mortgage Insurance-an impact of the finanical crisis! 8Apr 10, 2009 8:16 pm thlo We sometimes wrongly assume that everyone here lives in a metropolitan area (and members not displaying their location in their profile doesn't help either). I think it's timely I cover an important aspect of lending here. If you don't have 20% deposit, LMI geographical zoning applies. Every zone or category has its own maximum limits in terms of borrowing (amount and LVR). So if you are in say Wollongong (category 1) and you are first home buyer with no genuine savings, the maximum you can borrow against land may be 70% but to buy an established home may be 95% (max $650,000). But if you are in Bendigo (category 2) maximum loan amounts are reduced. Bega (category 3) would be even less. Thlo, how does this work with RAMS? I have a 100% loan, which I am waiting for unconitional approval on. They apparently use WLMI. Will WLMI insure 100% loans? Blog: http://house.jay.net.au/ Re: 20% 4 Mortgage Insurance-an impact of the finanical crisis! 9Apr 11, 2009 8:53 am Hi thlo, That makes more sense, we are in Canberra so I'm assuming the 20% applies here? We do have genuine savings but not 20% worth. Can we use our paremts home as equity/deposit or as a guarantor and how does that work? Re: 20% 4 Mortgage Insurance-an impact of the finanical crisis! 10Apr 11, 2009 2:42 pm fordehouse Hi thlo, That makes more sense, we are in Canberra so I'm assuming the 20% applies here? We do have genuine savings but not 20% worth. Can we use our paremts home as equity/deposit or as a guarantor and how does that work? Every insurer has their own limits so I can only make assumptions not knowing the full circumstances of your situation. But from what you describe it sounds like your lender's LMI policy changed or maybe your circumstances changed since what they indicated to you last year. LMI is a rather complex field even for bank / lender credit assessors. On the RAMS issue, I think you are aware 100% loans have been discontinued. Did your lending manager at the branch indicate to you that your approval will be honoured? That's the key question. Re: 20% 4 Mortgage Insurance-an impact of the finanical crisis! 11Apr 11, 2009 2:55 pm fordehouse Can we use our parents home as equity/deposit or as a guarantor and how does that work? fordehouse, I need to add; You can borrow 100% of your purchase or build by using the equity your immediate family has in other property. The end result is that you buy a house with no deposit, pay no mortgage insurance. A nice by-product; the lenders' mortgage insurance savings are substantial. But keep in mind this involves re-submission of your loan with the new structure, with certain documentation from your guarantors and they need to be aware of the implications of tying up their property (the bank will also require them to obtain legal advice in the loan contract). Re: 20% 4 Mortgage Insurance-an impact of the finanical crisis! 12Apr 11, 2009 6:34 pm The other thing some banks offer is to let a family member go guarantor by setting up a term deposit for the amount you are short of to reach 80% borrowings and then the bank holds that term deposit 'captive' until such time as the value of your asset (your new house) gets your Loan to Value Ratio past 80%....then you can apply for a revalution of your property and 'release' your family member's guarantee...I probably haven't explained that at all well ...but it is a handy thing if you aren't too short of the 80%...your family member's term deposit earns interest etc just as usual, it just can't be 'cashed out' until released as your security...tying myself up in knots here..Thlo, do you have a simpler explanation!!???? Re: 20% 4 Mortgage Insurance-an impact of the finanical crisis! 13Apr 11, 2009 7:02 pm thlo fordehouse On the RAMS issue, I think you are aware 100% loans have been discontinued. Did your lending manager at the branch indicate to you that your approval will be honoured? That's the key question. Apparently we are safe. We submitted our application a couple of months ago when the 100% loans where OK with RAMS. Our pre-approval was still valid when we submitted the cotnracts for formal approval. So the manager said I was lucky and could still go through with 100%. Having said that, I only need an extra $4k to go for 95% LVR. The 100% loan is actually 96.5% plus LMI capitalised upto 100%. Blog: http://house.jay.net.au/ Blacktown Home Loan Centre 14Apr 16, 2009 12:03 pm jaytyn1 thlo fordehouse On the RAMS issue, I think you are aware 100% loans have been discontinued. Did your lending manager at the branch indicate to you that your approval will be honoured? That's the key question. Apparently we are safe. We submitted our application a couple of months ago when the 100% loans where OK with RAMS. Our pre-approval was still valid when we submitted the cotnracts for formal approval. So the manager said I was lucky and could still go through with 100%. Having said that, I only need an extra $4k to go for 95% LVR. The 100% loan is actually 96.5% plus LMI capitalised upto 100%. Make sure they tell you when the absolute end of the grace period is. 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 7925 I apologise for any confusion, but your understanding is correct. We approached our situation differently based on advice from… 11 53177 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 4724 |