LATEST NEWS

September 2010

Can now offer 100% lending but in a different format. Can do 95% plus lenders mortgage insurance as long as 100% loan valuation ratio is not exceeded. May also take a secured credit card totake loan valuation ratio to 100%. Call us now to see if you qualify.

2009 Changes

Genworth and QBE/PMI have withdrawn their 100% Home Buyers Products. Early April 2009 saw the last 100% LVR Home Buyer Product vanish from the Australian lending market. The best a home buyer can expect now is 95% of the purchase plus mortgage insurance to a maximum of 97% (this means 95% of purchase price with mortgage insurance being added to this as long as you do not exceed 97% of the purchase price after mortgage insurance is capitalised).

NOTE OF CAUTION

During late 2009 and early 2010, some of the major banks have tightened home loan lending policy even further. We have discovered instances where the mortgage insurer will take on the risk but some banks will not. We now have to consider the lender based upon the mortgage insurance provider.

Ask us today for recent examples.

 

 

 

Lenders Mortgage Insurance Explained

This site www.mortgageinsuranceaustralia.com.au is a free information service to assist consumers with information regarding mortgage insurance in the Australian Bank and Non-Bank sector. This free service has been provided by National Finance Corporation www.nfc.com.au and explains how it works. We have also provided specialised information for First Home Buyers at firsthomeowner.org.

Lenders' Mortgage Insurance (LMI) protects a lender against loss should a borrower default on the loan and the property is subsequently reposessed and sold. The insurance covers the amount from the sale where it is not enough to pay off the loan in full to the bank or lender.

Who applies for LMI?

The lender applies for the insurance directly normally from their centralised mortgage processing centres. Mortgage brokers cannot normally directly apply for lenders mortgage insurance contracts. Bank staff at branch level also do not typically apply for lenders mortgage insurance contracts.

Who is insured by the LMI?

The lender, not the borrower, is actually covered by LMI. Bank staff and mortgage brokers I belive do not adequately explain this to borrowers. I have met many people over the last 20 plus years who believe lenders mortgage insurance provides cover to them personally.

What types of loans can be insured?

Most mortgage insurance companies will provide LMI for most residential mortgage loans including: 

  • Owner occupied loans
  • Property investment loans
  • Construction loans 
  • Home improvement or extension loans 
  • Principal and interest loans
  • Interest only loans 
  • Lo Doc Loans for all the above

Why should I pay to insure my lender?

For lenders, LMI gives the institution the confidence to approve more home loans and enhances their ability to lend to a broader range of customers. For borrowers, LMI means they can purchase a home or an investment property sooner, allowing people with less than 20% deposit to get into the property market earlier.

What will be the fee for LMI?

LMI is a once only fee which is paid at loan settlement. How much money you borrow and the size of your deposit will determine the fee amount for the LMI.

How do I qualify for LMI?

Before any mortgage insurance company will insure a mortgage, the lender needs to check the borrower's credit history, ensure they are able to meet the mortgage repayments and that they are adequately secure.

How can NFC National Finance Corporation help with LMI?

LMI is a complex area and requires experienced advisors to guide borrowers through the maze. When you choose NFC National Finance Corporation you choose a team with over 25 years' experience in the banking and finance industry. The Directors and key staff of National Finance Corporation have gained this experience as senior management of Australia's leading financial institutions and investment companies.

Why trust NFC National Finance Corporation?

NFC National Finance Corporation is a nationally accredited finance broking company and for it's key staff, the finance and investment industry is their life and passion. NFCNational Finance Corporation's mortgage brokers are members of the Mortgage and Finance Association of Australia (MFAA).

 

Did You Know

Genworth have recently being approving mortgage insurance cover for applications which are declined by Commonwealth Bank (CBA) and Westpac.

What does this mean? Contact us to find out how this could benefit you. Don't rely on the decision of your own bank. Contact the right mortgage broker to discover your path through the ever changing banking landscape in Australia.

 

LMI History and Players

Ten years ago we had 4 mortgage insurers accessible to most lenders. They were CGU, Royal & Sun Alliance, MGICA (then PMI now QBE) and Housing Loans Insurance Corporation (HLIC). HLIC were in essence the old government statutory body set up to assist Australian lenders. This has now become Genworth LMI. In a limited capacity, PRIME and The Mortgage Insurance Company were providing cover to smaller players but appear to have vanished at the commencement of the GFC.

A few major lenders however have what we call "Open Policy" which means they may have a separate policy for the approval of LMI. This can mean a different decision from one bank to the next but ultimately with the same mortage insurance provider.