MAP has had a few clients lately who have applied directly to their lender or through another mortgage broker and been advised that the bank would happily lend to them however their lenders mortgage insurer would not due to their temporary residency or expat status.
The result of this is that the home loan application will be declined as the bank will not, without Lenders Mortgage Insurance, agree to approve the mortgage. This article outlines what lenders mortgage insurance is and how to avoid such a situation.
LMI is insurance that protects the bank when a borrower does not have a full 20% deposit. Essentially, it covers the bank should the borrower fail to pay the mortgage and the bank makes a loss on sale. LMI is, as a rule, only applied to home loans with an LVR of greater than 80%. It is insurance that protects the bank, not the borrower.
LMI is just like car or home insurance. Except in this case the asset being protected are the loan funds advanced to the borrower. So, just like you insure your car against fire or theft, the bank insures the loan just in case the borrower can not pay it back. The only difference is that the LMI premium is paid by the borrower even though the insurance protects the bank only. It would kind of be like you insuring your car and getting paid out if it was stolen, but the annual premium was paid by someone else.
Note: Unlike car or home insurance, LMI is a once off upfront fee.
If you have been declined because of your residency status there still may be hope. There two main lenders mortgage insurers in the market place as well as a handful of banks who self insure, that is, they insure the loans themselves. Therefore, your loan may have been declined by one of the lenders mortgage insurers but another one may well approve your loan.
It is therefore important that you get professional expert advice from a non-resident home loan specialist before applying again so as not to risk another credit enquiry on your credit file.
More information can be found here on what to do when your home loan has been declined by the banks or lenders mortgage insurers.
Ari & Nadene ThomasWe recently worked with Justin refinance our loan. This is the 2nd time working with him and both times have been a pleasure.
Justin has always gone above and beyond to assist us to ensure we get the best possible service. Not only does he show a professional attitude toward his role, but he also shows a genuine interest in our family to assist with our financial matters.
I would have no hesitation in recommending Justin to people important in my life.
Matthew KGreat communication from Justin who helped through a fairly tumultuous time in our lives. We genuinely appreciated the hand-holding and methodical approach they used to help us secure out first home.
Yours sincerely Matt, Kit and our new baby Sapphire ❤
Mitch and AngieWe’ve had a very positive experience with Justin after being referred to him by our Financial Advisor. Justin’s communication was fantastic and he was always careful to explain each step of the way to us throughout our refinancing experience. We would certainly work with Justin again in the future given the chance!
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