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.
ShannonJustin was brilliant to have as an broker. He worked with my schedule and got everything organised with good counsel and assisted with resolving any issues, and where he wasn’t able to personally, pointed me in exactly the right direction to work the issue, myself. Absolutely will be utilising his services again in the future.
Ilse & Dave HawkinsJustin guided us from start to finish with our refinancing process, and was able to get the lowest possible interest rate. He kept us informed and made it a simple and quick. Justin was a pleasure to deal with! Thank you Justin!
Dan & Lisa DuncanWe have worked with Justin to refinance our house and an investment property.
We had some complexities that Justin guided us through. He achieved a better rate and structure for us than we had dealing directly with the CBA.I have worked with other brokers over the years, but none as responsive, knowledgeable, and easy to work with. Thanks mate!
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