The Biking Broker Newsletter - 24th November 2010

Exit fees reduced, but LMI still adds to refinance costs.

There has been a lot of media around bank exit fees in last couple of weeks and many lenders have announced removal of these fees and financial incentives in the form of rebates to switch.   However, the biggest cost in refinancing to a new lender could be lenders mortgage insurance (LMI) which is currently a non-transferrable policy.

When refinancing, ask your broker to consider several lenders which will have different rates for LMI.  The difference can be hundreds or thousands of dollars for large loans.  For example, the LMI premium on a 90% LVR loan for $350,000 from one of the big four banks is $4,691 whilst from another it’s $5,953.   A difference of $1,262!

Better still, if you can refinance at less than 80% LVR you can avoid it all together.  The Biking Broker will alway consider all the relevant costs when presenting a refinancing solution to you and has the inside information on all the rebates being offered.