Resi has been offering a monthly Lender Mortgage Insurance (LMI) option for some time, in addition to the traditional upfront LMI. Many of you may be familiar with this option, so instead of revisiting the basics, Resi would like to explore some of the lesser-known aspects of their Monthly LMI Option through a Q&A.
What are the benefits of monthly LMI, and why should I offer it as a solution for my clients?
Monthly LMI provides several benefits:
• No upfront investment v. upfront LMI providing greater flexibility for borrowers
• Bringing customers into the market sooner – Resi’s ability to provide monthly LMI to 95% for both Owner-Occupied and Investment purposes competes with 95% plus cap LMI offers
• Cancel LMI payments once LVR drops below the required level
I have heard that borrowers can cancel the LMI policy once their LVR drops below 80/75%, how does this work?
LMI will be cancelled once either:
• An updated valuation drops the LVR below 80%
• The loan pays down to below 75% LVR on a scheduled balance basis
Please note both are subject to a borrower request.
How often can an updated valuation be requested?
A valuation can be requested after an initial period of 12 months after loan settlement and annually thereafter. The borrower bears the cost of the valuation, and prior to ordering, Resi often uses RP data to provide an indication of the likelihood of the valuation providing for the desired outcome.
How will I know if monthly LMI is likely to benefit my client?
Resi has developed a comparison tool that will require some basic information (monthly LMI premium amount, borrower interest rate, loan size, etc which can be compared to an upfront LMI example. The borrower will also need to indicate if they intend to pay any additional amounts off their loan and provide an assumption for property price growth rates). This will then give an indication of which option may be beneficial based on the information inputted. This calculator is hosted in the broker section of the Resi website here. If you don’t currently have access, please reach out to the sales team for login details.
Monthly LMI provides an additional option for borrowers. Generally, it will benefit those looking to aggressively pay down their home loan faster or anticipate their property will enjoy property price growth in line with historical levels. Finally, without the large upfront fee impost, it does provide borrowers with greater flexibility to consider their financing options in the future as their circumstances change.
If you would like to learn more about Resi’s monthly LMI option, please reach out to your Resi BDM for any questions or send an email to brokersupport@resi.com.au.
