Home News LMI refund

LMI refund

Font size :
Nila Sweeney
Q. Is it true that if you refinance or you pay out your mortgage within the three years, you’re entitled to a refunded portion of the mortgage insurance paid? If this is so, who refunds it, the bank or the insurer, and when do you get the refund?
 
A. Most LMIs (lenders mortgage insurance) refund mortgage insurance to borrowers, either directly or indirectly through the lender if the LMI policy is cancelled in the first 12 months of the loan. A refund is available if the principal and accrued interest is repaid in full and the borrower hasn’t defaulted on any mortgage repayments. Refunds generally aren’t paid after 12 months of the home loan has expired.
 
The amount of the refund varies between LMIs from 40% to 50% of the original premium. While the refund sounds like only a small amount, stamp duty on a mortgage insurance contract isn’t refunded. In addition, as the risk of default is greatest during the early years of the mortgage, including the first year, some of the insurance cover has already been spent.
 

Borrowers should clarify their lender’s policy on refunding mortgage insurance. The refund is automatic and is initiated by the lender as part of the loan settlement process. Once the property is sold or the loan repaid, mortgage insurance is refunded to the lender or direct to the borrower within 30 days of the loan being paid out.

Related: Home Loan Calculator

With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now

Mortgage News and Articles

Mortgage applications drop in second quarter Mortgage applications drop in second quarter

This marks the “beginning” of a downward trend, says Equifax executive Read more

To break monopoly, many smaller lenders could become banks To break monopoly, many smaller lenders could become banks The proposed change could break the Big Four’s monopoly over the mortgage market and help families get cheaper home loan rates ... Read more

Borrowing against the home: A strategy to pay for aged care Borrowing against the home: A strategy to pay for aged care Such debts can generally be divided into long-term and short-term loans ... Read more

NAB slashes growth forecasts for houses, units NAB slashes growth forecasts for houses, units Numerous factors, including tighter credit rules and the growing supply of new stock, have reined in Australia’s seemingly unstoppable housing market boom ... Read more

More mortgage news and articles

Sponsored Links

Saturday, Jul 22, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Whether you're a first homebuyer, looking to refinance, or investing, it's important to have the right loan for your needs. Just fill in a few details below and one of our trusted mortgage advisers will contact you.

A quick & easy way to find the right home loan
  • Purpose of mortgage
  • Household Income
    $
  • How much do you want to borrow?
    $
  • How much deposit do you have?
    $
  • How much is your house worth?
    $
  • How much do you still owe on your mortgage?
    $
  • What type of mortgage do you have?


  • How much is your new home?
    $
  • How much do you want to borrow?
    $
  • How soon do you want a mortgage?
Next
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords